Is Social Security income taxable? The short answer is yes – money that you receive through Social Security benefits may be taxed. However, whether or not your benefits will be taxed depends on how much total income you make. And the income threshold for having your benefits taxed changes based on whether you are filing as an individual, married and filing jointly, or married and filing separately. At a maximum, up to 85% of your Social Security benefits can be taxed – but depending on your situation, as little as 0% of your benefits may be taxed.
How much of your Social Security income is taxable?
Tax filing status has a big impact on how much of Social Security is taxable. Here are the most common filing options and the income thresholds for taxation.
- Filing as Single, Head of Household, or as a Qualifying Widow or Widower: If you make between $25,000 and $34,000, you may need to pay taxes on up to 50% of your Social Security benefits. If your income is more than $34,000, you may need to pay taxes on up to 85% of your benefits.
- Filing jointly, Married: If you and your partner have a combined income between $32,000 and $44,000, you may need to pay taxes on up to 50% of your Social Security benefits. If your combined income is more than $44,000, you may need to pay taxes on up to 85% of your benefits.
- Filing separately, Married: Base income amount for taxation is $0 and maximum income amount for taxation is also $0 – you will likely have to pay taxes on benefits.
To clearly understand how much of your Social Security income is taxable, it’s important to know how your total income is calculated. Here’s how it works:
- Determine adjusted gross income (AGI). This combines Social Security income with all other income sources. These sources can include wages, self-employment income, dividends, interest, and other forms of taxable income.
- Tax-exempt interest is added to the AGI (even though this interest isn’t taxable.)
- If this total amount is more than the minimum income threshold for your filing status, 50% of your Social Security benefits (or more) will be considered taxable.
- Next, you will choose to either take the standard deduction or itemize deductions – this will provide you with your net income. The exact amount of tax you owe will depend on where your net income lines up in the income tax table.
What types of Social Security income are taxable?
Many other government benefit programs follow tax guidelines that are similar to those used for Social Security benefits. However, it’s important to note that Supplemental Security Income (SSI) program benefits are not taxable. Let’s take a closer look at several common types of benefits and how they are taxed.
Spousal Benefits
Taxes for spousal benefits are handled the same way that Social Security benefits are. Even if your spouse is collecting benefits but you aren’t, you may be taxed on 50% of benefits if your joint income is above $32,000, and taxed on up to 85% of benefits if your joint income is over $44,000.
Disability Benefits
Disability benefits are taxed in the same way as Social Security benefits. If you meet a certain threshold, the benefits will be taxed. If you are filing as Single, at least 50% of you benefits will be taxed if your income exceeds $25,000. If you’re married and filing jointly, at least 50% will be taxed if your combined income exceeds $32,000.
Survivor Benefits
Survivor benefits are rarely taxed because children do not usually meet the required income threshold. Survivor benefits are only taxable if half of the child’s benefits plus their additional income is greater than $25,000. If the survivor benefits are a child’s only source of income, they are not taxable.
How to file Social Security income on your federal taxes
In order to figure out if you need to pay federal income tax on your benefits, you will need to have a record of the total amount of benefit money you have been paid over the course of the year. Each January, the government will mail you a tax form called SSA-1099 – this form will show the total amount of benefits that you received during the previous year. If you are above the threshold for taxation on your benefits, you have the option of having these owed taxes withheld from future payouts. In order to request withholding, you will need to complete form W-4V. As an alternative, you can pay quarterly tax bills to cover any taxes that are owed on benefits.
How to file Social Security income on your state taxes
If you reach the income thresholds discussed above, you will need to pay federal taxes on your Social Security benefits – regardless of the state you live in. In most states, you will not need to also pay state taxes on your benefits. However, there are twelve states that do collect taxes of some sort on Social Security benefits. There are only two states that collect taxes based on the same tax rules as the federal government. Ten other states have partial taxation and include exemptions related to age and income.
States that tax Social Security benefits:
| How states tax Social Security benefits | State |
| Benefits taxed using federal rules | Minnesota, Utah |
| Benefits partially taxed with exemptions based on age and income | Colorado, Connecticut, Kansas, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Vermont, West Virginia |
Do Roth IRAs impact Social Security taxes?
A Roth IRA—or “Individual Retirement Fund”—is a type of fund that allows you to pay taxes on your savings up front, and then have this money grow tax free over time. If your Roth IRA has been in place for over 5 years and you are over the age of 59 ½, you can begin to make withdrawals from your account without having to pay taxes on the withdrawn money. If you have a Roth IRA and meet these conditions, withdrawals from your Roth IRA don’t need to be included as income when figuring out if your Social Security benefits are taxable.
The Bottom Line
Your specific tax situation will determine whether or not your benefits will be taxed. By understanding income thresholds and filing statuses, you can be ready ahead of time. And if you need help preparing and filing your taxes, our tax experts are here for you! Learn more about Sun Loan’s tax preparation services here.
