Are Social Security Benefits Taxable on a 1040A Form?
The Internal Revenue Service requires most Americans to complete an income tax form each year. You choose whether you file Form 1040EZ, Form 1040A or Form 1040. The Form 1040 allows the most income and the most deductions and variables, but the 1040A works for income from employers, interest, retirement and Social Security benefits, up to $100,000 in income. Taxation of Social Security retirement benefits depends on your total income for the year.
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History
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Social Security retirement was not taxable income from 1938 until 1983, when Congress enacted reforms to tax higher-earning recipients. In 1993, another layer of taxes developed for higher-earning recipients. In 2010, the IRS imposed two potential tiers of taxes -- 50 percent or 85 percent of benefits may be taxable.
Significance
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If your only income is Social Security, retirement benefits alone are not taxable. If you have other income, the IRS may tax your retirement benefits. The determinant for taxation is your combined income.
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Combined Income
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Combined income calculations are only to determine taxation of Social Security benefits. A worksheet is available in Publication 915 from the IRS, but here's how to calculate combined income: Add your taxable income from all sources, 50 percent of your Social Security benefits from your Form SSA-1099 and all of your nontaxable interest income. The result is your combined income.
Taxable Social Security
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If you are single and your combined income is under $25,000, you do not owe taxes on Social Security retirement benefits. That figure is $32,000 if you are married filing jointly. A combined income figure between $25,000 and $34,000 for a single person taxes 50 percent of Social Security benefits. That figure is $32,000 to $44,000 for those married filing jointly. If your income is more than $34,000 as a single taxpayer or $44,000 married filing jointly, the IRS taxes 85 percent of your Social Security benefits.
Reporting on Form 1040A
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Use the Form SSA-1099 sent to you early in the year to have correct numbers to report your Social Security income on Form 1040A. The information from Box 5 of the SSA-1099 goes on Line 14a of your Form 1040A tax return. Line 14b is for the taxable part of Social Security benefits. Add the figure from 14b to your other income to calculate your federal income taxes owed for the current year.
Voluntary Withholding
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You may obtain Form W4-V and have the Social Security Administration withhold taxes from your benefits, if you choose. Since this is voluntary, you choose the amount you want withheld. Your choices are five percent, seven percent, 15 percent or 25 percent. Complete the form and deliver it to the nearest Social Security office to start withholding taxes for next year.
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