Social Security Benefits That May Be Taxed

Taxes on Social Security benefits are due when individuals or couples earn a certain level of income. This is generally based on having other considerable income, which could include earnings from a job, dividends and interest.

Even if required to pay taxes, taxes will never be paid on more than 85 percent of benefits. To determine responsibility for paying taxes on Social Security benefits, the Social Security Benefit Statement (SSA-1099), which recipients receive in January, shows benefits received the previous year and can be used when filing a tax return. The rules vary depending on whether the person is filing an individual or joint tax return.

Taxing Social Security Benefits: Individual vs. Joint Returns

If filing individually and combined income (adjusted gross income + nontaxable interest + ½ of Social Security benefits) is between $25,000 and $34,000, up to 50 percent of benefits may be taxable. If combined income is greater than $34,000, up to 85 percent of benefits could be taxed.

If filing jointly and combined income is between $32,000 and $44,000, up to 50 percent of the benefits could be taxed. If combined income is greater than $34,000, it could be as much as 85 percent. Married couples also may pay taxes on benefits if they file separate returns.

Paying Taxes on Social Security Benefits

Beneficiaries either can make quarterly payments to the IRS or they can have a percentage withheld from their benefits. The choices for withholding taxes from monthly benefits are 7, 10, 15 or 25 percent. No other percentages or flat dollar amounts are allowed.

It’s important to understand that although most debt cannot be garnished from Social Security benefits, there are some events where it could be allowed, which may be discussed with an attorney. An example is when federal income taxes are owed. This may be prevented by ensuring that all taxes on Social Security benefits are paid. 

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