When it comes totax season, there's barrage of mind-boggling forms and detailed calculations. It can feel like a herculean task to get your personal finances in order, especially if you're not quite sure of the rules.
If you receive Social Security benefits from the government, for example, that money is subject to taxes. The amount you have to pay varies based on income and whether you are filing a joint or individual return.
To walk you through the process, here's a guide to the formula used by the Internal Revenue Service to determine just how much you'll owe on your benefits:
Are Social Securitybenefitstaxable?
Yes.The rules of the Internal Revenue Service dictate that many who receive Social Security benefits will have to pay an income tax on that money.
The amount you pay is determined by a calculation that involves what the IRS calls "combined income."
Combined income is:Your adjusted gross income plus nontaxable interest plus half of your Social Security benefits.
Up to 85%of your Social Security benefits are taxable if:
- You file a federal tax return as an "individual"and yourcombined income ismore than $34,000.
- You file a joint return, and you and your spouse have acombined income ofmore than $44,000.
Up to 50%of your Social Security benefits are taxable if:
- You file a federal tax return as an "individual"and yourcombined income is between$25,000 and $34,000.
- You file a joint return, and you and your spouse have acombined income between$32,000 and $44,000.
State taxes:How to save with credits on state returns.
SSA-1099 form: How to get it
To help you figure out how much you received in benefits over the course of the year, the Social Security Administration should send you a formin January.
This is yourSocial Security Benefit Statement, or SSA-1099, and can be used to figure out how much you owe when you are filing your federal tax return.
For all those who receive benefits, the SSA-1099 should be mailed to you automatically. If you do not receive it, a printable version should be available online after you create a "my Social Security" account.
Are you missing important tax dates?Here are tax milestone birthdays to know.
Contributing: Olivia Munson
More of your 2023 tax season questions answered
FAQs
You report the taxable portion of your social security benefits on line 6b of Form 1040 or Form 1040-SR. Your benefits may be taxable if the total of (1) one-half of your benefits, plus (2) all of your other income, including tax-exempt interest, is greater than the base amount for your filing status.
Is Social Security income taxable by the IRS? ›
You report the taxable portion of your social security benefits on line 6b of Form 1040 or Form 1040-SR. Your benefits may be taxable if the total of (1) one-half of your benefits, plus (2) all of your other income, including tax-exempt interest, is greater than the base amount for your filing status.
How do I know if my Social Security benefits are taxable? ›
You will pay federal income taxes on your benefits if your combined income (50% of your benefit amount plus any other earned income) exceeds $25,000/year filing individually or $32,000/year filing jointly. You can pay the IRS directly or have taxes withheld from your payment.
How much can you make on Social Security and not file taxes? ›
If Social Security benefits were your only income in a given year and you receive less than $25,000 in benefits, your Social Security income is generally not taxable, and you probably do not need to file a federal income tax return.
At what age is Social Security no longer taxed? ›
There is no age at which you will no longer be taxed on Social Security payments. So, if those payments when combined with your other forms of income, exceed one of the two thresholds, then you will have to pay at least federal taxes on either 50% or 85% of the benefits you receive.
What is the maximum income that Social Security is taxed on? ›
The Social Security tax limit refers to the maximum amount of earnings that are subject to Social Security tax. For 2024, the Social Security tax limit is $168,600. Workers earning less than this limit pay a 6.2% tax on their earnings.
When did Social Security become taxable? ›
The taxation of Social Security began in 1984 following passage of a set of Amendments in 1983, which were signed into law by President Reagan in April 1983. These amendments passed the Congress in 1983 on an overwhelmingly bi-partisan vote.
What kind of income is not taxed for Social Security? ›
Pension payments, annuities, and the interest or dividends from your savings and investments are not earnings for Social Security purposes. You may need to pay income tax, but you do not pay Social Security taxes.
At what age do seniors stop paying federal taxes? ›
Taxes aren't determined by age, so you will never age out of paying taxes. Basically, if you're 65 or older, you have to file a tax return in 2022 if your gross income is $14,700 or higher.
Can I get a tax refund if my only income is Social Security? ›
You would not be required to file a tax return. But you might want to file a return, because even though you are not required to pay taxes on your Social Security, you may be able to get a refund of any money withheld from your paycheck for taxes.
Have you heard about the Social Security $16,728 yearly bonus? There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.
How much money can a senior make without paying taxes? ›
For retirees 65 and older, here's when you can stop filing taxes: Single retirees who earn less than $14,250. Married retirees filing jointly, who earn less than $26,450 if one spouse is 65 or older or who earn less than $27,800 if both spouses are age 65 or older.
Do people over 70 pay taxes on Social Security? ›
While you may have heard at some point that Social Security is no longer taxable after 70 or some other age, this isn't the case. In reality, Social Security is taxed at any age if your income exceeds a certain level.
How much of my Social Security is taxable in 2024? ›
Up to 50% of your Social Security benefits are taxable if: You file a federal tax return as an "individual" and your combined income is between $25,000 and $34,000. You file a joint return, and you and your spouse have a combined income between $32,000 and $44,000.
Is Social Security considered gross income? ›
Social Security benefits are included in your adjusted gross income (AGI) if your total income, which consists in half of your Social Security benefits and other sources of income, exceeds a certain threshold.
Why is Social Security taxed twice? ›
The rationalization for taxing Social Security benefits was based on how the program was funded. Employees paid in half of the payroll tax from after-tax dollars and employers paid in the other half (but could deduct that as a business expense).
