Income Tax Rules for Social Security Payments
This article will discuss the Federal Income Tax rules for Social Security payments. It only covers Federal Taxes, and as all states have different tax rules, you should find out from a qualified tax professional whether you must pay state taxes on Social Security payments.
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What is Social Security?
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Social Security includes benefits many Americans receive after turning a certain age, disability benefits, unemployment benefits, health insurances and temporary assistance.
What is Income Tax?
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Income tax is the amount of tax that you pay on income and payments received from any source. Unless the IRS specifically excludes something as income, it will be taxed. The IRS often excludes payments made by Social Security, but only up to a certain level.
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Who Pays Taxes?
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Less than a third of Social Security recipients need to pay taxes on their benefits (according to Social Security online).
Not Married Individuals
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As of 2009, individuals earning less than $25,000 in combined income do not have to pay taxes on their Social Security benefits. Combined income is the total of income received from other sources along with non-taxable interest, plus half the Social Security benefits.
Individuals earning from $25,000 to $34,000 in combined income generally pay taxes on half of their Social Security benefits.
Individuals earning more than $34,000 will have to pay income taxes on a larger portion of their benefits, up to 85 percent total.
Married Filing Separately
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Individuals who are married but file separate returns generally have to pay income taxes on all of their benefits.
Married Filing Jointly
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Married couples filing a joint return generally do not need to pay taxes on Social Security benefits if their combined income is less than $32,000.
Married couples filing a joint return with a combined income of $32,000 to $44,000 generally have to pay taxes on about half of the benefits.
Married couples earning more than $44,000 in combined income may have to pay income taxes on up to 85 percent of their Social Security income.
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Comments
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spouse has a debt with social security and doesn'nt work, can SS take the owed debt from the spouse that works account because both are on the bank account? if so is there a loop hole to get that tax refund back?
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