Are you aware that some Social Security benefits may be considered taxable income? Even though some taxpayers find that their benefits aren’t included at tax time, there are some benefits that will be subject to taxation. The IRS has special rules to help you determine which Social Security benefits are taxed.
Form SSA-1099, Social Security Benefit Statement, is distributed to taxpayers who received benefits during the current tax year. This statement lists the total amount of benefits received.
Generally, you can figure out if your benefits are taxable by comparing them to your other sources of income. If you have no other sources of income, and you’ve only receive Social Security benefits, then chances are you’re not going to be taxed. You may not even be required to file a tax return at all. On the other hand, if you have other forms of income, it may be determined that you should pay taxes on your Social Security benefits. Additionally, income amounts and filing status can also play a role in whether not your benefits are taxed.
There’s a pretty simple equation which you can use to figure out if your benefits will be taxed.
All you need to do is add half of the amount of your Social Security benefits to the total amount of your income. This includes any interest that is tax exempt. Next use the following information to see if your amount is greater than the limit for your filing status. If it is, your benefits will most likely be taxed.
- Single, HOH, Qualifying Widow(er), Married Filing Separately (did not live together)- $25,000
- Married Filing Jointly – $32,000
- Married filing separately, if you’ve lived together at any point throughout the year – $0