How to Calculate Income Tax on Social Security Benefits

You calculate income tax on Social Security benefits depending on your other sources of income.

Social Security is a benefit many Americans depend on each and every month. If you are one of these individuals and Social Security is your only form of income, you do not need to file a federal income tax return. However, if you do have a job and Social Security acts as supplemental income, you most likely need to claim at least part of the benefits earned on your tax form.

Instructions

1. Determine the amount of your income including your Social Security benefits. If you make over $25,000 as a single head of household, or over $32,000 as a married couple filing jointly, part of your benefits are going to be taxed. You are going to be taxed for about 50 percent of the benefits you receive if your income is higher than these figures.

2. Add up how much money you are receiving in social security checks. If you are making over $34,000 as a head of household, or over $44,000 and married filing jointly on just your benefits, up to 85 percent of it is potentially going to be taxed.

3. Fill out your 1040 income tax forms. There is a 1040A instruction book to help you with the filing process. The 1040 forms will help you determine the exact amount of your Social Security benefits that are going to be taxed.

4. File IRS Form W-4V (Voluntary Withholding Request), which will allow you to sign up for voluntary withholdings. Using this option, you can have 7 to 25 percent of your Social Security benefits withheld for taxes. Knowing you won't have to claim as much of your benefits for tax purposes will help make balancing your budget easier.

References

• Bankrate: Social Security Benefits May Be Taxable

Resources

• IRS: Form W-4V: Voluntary Withholding Request