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If you receive Social Security benefits, keep in mind that you may have to pay taxes on that money. Like many parts of the tax code, figuring out whether and how much you owe can be complicated.
Here’s a guide to the formula the Internal Revenue Service uses to determine how much you should pay for benefits. The amount you have to pay depends on your income and whether you file jointly or individually.
Are Social Security benefits taxable?
Yes, Social Security benefits are taxable. According to IRS rules, many people who receive Social Security benefits must pay income taxes on that money.
The amount you owe is determined by calculating what the IRS calls your “total income.”
What is combined income for Social Security taxes?
The calculation of “total income” refers to adjusted gross income plus tax-free interest and half of Social Security benefits.
Up to 85% of your Social Security benefits are taxable if:
- You file a federal tax return as an “individual” and your combined income exceeds $25,000.
- You file a joint return and you and your spouse have a combined income of more than $32,000.
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 combined income between $32,000 and $44,000.
What is the SSA-1099 form and how do I get it?
The Social Security Administration will send you a form in January to keep track of the benefits you received throughout the year.
This is your Social Security Benefits Statement (SSA-1099), which you can use to figure out how much you owe when you file your federal tax return.
