Do You Pay Income Taxes on Your Widow's Social Security Benefits?

In addition to retirement benefits, Social Security provides survivors benefits to widows, widowers and children. Apply for survivors benefits soon after the death of a worker who has paid into the Social Security retirement system. The deceased worker must have sufficient quarters of employment and you must be age 60 or caring for a child who qualifies. Once you receive benefits, consider income tax ramifications.

Federal Income Taxes

Taxation of Social Security survivors benefits depends on total income figures. Widow's benefits are available as early as age 60, an age when most women continue employment. Combined income is the figure calculated for the purpose of determining federal income taxes. Using the adjusted gross income figure from IRS Form 1040, add nontaxable interest and 50 percent of your Social Security survivors benefits to arrive at an annual combined income figure. If this figure exceeds $25,000 but is not more than $34,000, the IRS taxes up to 50 percent of your Social Security benefits. If the figure is in excess of $34,000, the IRS taxes up to 85 percent of your Social Security benefits. These figures are for individual filers only.

Penalties

Accepting Social Security prior to full retirement age may incur penalties in addition to income taxes. You may be assessed penalties by the Social Security Administration for earned income. Income in excess of $14,160 in 2010 subjects early retirees to a penalty that is $1 in penalty for every $2 earned in excess of $14,160.

Penalties may affect your income tax calculations for survivors benefits. The Social Security Administration sends IRS Form SSA-1099 at the beginning of the year to help identify the taxable amount for the previous year.

Considerations

You can have income taxes withheld from your Social Security survivors benefits by filing a W-4V form with Social Security. This will avoid the possibility of having a large tax liability at the end of the year. You may choose to have 7 percent, 10 percent, 15 percent or 25 percent withheld from your benefits.

A widow can collect survivors benefits based on her spouse's work history and continue to work, accruing additional benefits on her own work record. She may be able to change over to her own benefits for a greater benefit when she reaches full retirement age. Check with your local Social Security office or call the 800 number if you are interested, since the rules are complex and the determination references your specific circumstances.

Children

If your children collect survivors benefits based on a deceased spouse's work history, you may have to file an income tax return for the child as well as yourself. If the check is made payable to you, you must determine how much of the benefit belongs to the child. Taxation depends on the total amount of income and benefits, according to the IRS.

State Income Taxes

State laws vary, and whether your state taxes Social Security income depends on many factors. Seven states have no state income tax and several others do not tax retirement benefits. Others do not tax Social Security benefits. Check with the Department of Revenue for your state to determine if your widow's benefits must be included in your total income for state income taxes.

References

• IRS.gov: Are Social Security Survivor Benefits for Children Considered Taxable Income?
• Social Security Online: Social Security Benefits for the Surviving Spouse by Year of Birth
• IRS.gov: Publication 915 (2009) Social Security and Equivalent Railroad Retirement Benefits
• Social Security Online: Taxes and Your Social Security Benefits
• IRS.gov: Sample Form 1099-R
• Social Security Online: Working While Receiving Widow's Benefits

Resources

• Social Security Online: Requesting to Have Income Tax Withheld From My Benefit