How to File Social Security Income on Income Tax
In most cases, taxpayers who receive Social Security payments as their only source of income are not taxed on their benefits. However, depending on how much income you have in addition to Social Security, up to 85 percent of your Social Security may be subject to tax. To file a complete and accurate return, you will need to do a series of calculations to determine if your Social Security income is subject to taxation.
- Difficulty:
- Moderately Challenging
Instructions
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Determine if any of your Social Security benefits are taxable. To do this, you will need to download Worksheet A, which is found in the instructions for the Internal Revenue Service's Form 1040. The worksheet is also found in IRS Publication 915. Both can be downloaded from the IRS website, irs.gov. If you prefer, you can order the publications by calling 800-TAX-FORM.
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Gather your SSA-1099 form as well as any other income information, such as W-2s, 1099s or any dividend or interest statements. In box A of Worksheet A, enter the amount from box 5 of your SSA-1099. In box B, enter half the amount of box A. In box C, input all other taxable income, such as dividends, wages, interest from stocks, dividends and so on. In box D, input any tax-exempt interest on income. In line E, enter the total from lines B, C and D.
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Compare the amount you entered in line E of Worksheet A with your "base amount." The base amount is dictated by your filing status. It is $25,000 for single, head of household or widow(er); $25,000 for married filing separately and living apart; $32,000 for married filing jointly; and zero for married filing separately and living together.
If the amount on line E is equal to or less than your base amount, none of your benefits are taxable. If the amount on line E is greater than your base amount, a portion of your benefits is taxable. Calculate the dollar amount of tax by completing Worksheet 1, which is found in IRS Publication 915.
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File your tax return using IRS Form 1040 or 1040A, as you cannot report Social Security income using the short-form 1040-EZ. Enter the amount from box 5 of your SSA-1099 on line 20a on Form 1040 and line 14a on Form 1040A. Mail your return to the IRS office that services your area, or submit your tax return electronically using online tax preparation software such as TurboTax or TaxAct. Allow 10 days' processing for electronically filed returns and six to eight weeks for mailed-in returns.
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Tips & Warnings
Remember that Supplemental Security Income (SSI) is not taxable income and should not be included on your tax return. SSI is for taxpayers who are over 65, blind or disabled. It is paid not from the Social Security fund but from the general fund of the U.S. Treasury.
If you do not report the taxable portion of your Social Security benefits on your tax return, you could owe tax. If you owe taxes and do not pay or make arrangements to pay, the IRS can garnishee your monthly Social Security payments up to 15 percent.
