Social Security Income Isn’t Tax-Free—Here’s How Much You Might Need To Shell Out

Social security benefits help many Americans meet their basic needs. Do you have to pay taxes on social security income?

Anuradha Garg - Author

Feb. 18 2022, Published 6:08 a.m. ET

Social security checks
Source: SSA Blog

Around 68 million people, including retirees and disabled people, receive social security benefits. These benefits help people in need meet their basic requirements, and are among the three major sources of retirement income for Americans. Do you have to pay taxes on social security income?

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Understanding these benefits and their tax treatment could help people better manage their retirement goals. The three major types of social security benefits are:

  • Retirement benefits.
  • Survivor benefits.
  • Disability benefits.
social security benefits irs
Source: Pixabay
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The Social Security Administration (SSA) also provides supplemental security income (SSI). This isn't part of social security benefits and isn't taxable. The portion of the benefits that is taxable will depend on the taxpayer’s income and filing status. A part usually becomes taxable when you have other substantial income in addition to your benefits, such as wages, self-employment, interest, or dividends.

How to determine if your social security benefits are taxable

According to the IRS, you should add one-half of the social security money you collected during the year to your other income.

  • If you're single and the total comes to more than $25,000, part of your social security benefits may be taxable.
  • If you're married and filing jointly, you should take half of your social security plus half of your spouse's social security, and add that to all your combined income. If that total is more than $32,000, part of your social security may be taxable.
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How much of the Social Security benefits could be taxable?

Up to 85 percent of a taxpayer’s benefits could become taxable if:

  • You're filing as a single, head of household, or qualifying widow or widower with more than $34,000 in income.
  • You're married and filing jointly with more than $44,000 in income.
  • You're married but filing separately and have lived apart from your spouse for the entire tax year, and you had more than $34,000 in income.

How to file social security income on your federal taxes

Every January, you'll receive a Social Security Benefit Statement (Form SSA-1099), which shows the benefits you received in the previous year. You'll need to enter this total amount in your Form 1040.

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If you're liable to pay taxes on social security benefits, you can make quarterly estimated tax payments to the IRS or choose to have federal taxes withheld from your benefits. To get your taxes withheld, you’ll have to fill out Form W-4V and mail it to your closest SSA office.

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State taxes on social security benefits

The above discussion is related to federal taxes on these benefits. However, depending on which state you live in, you may also have to pay state income taxes. According to AARP, the 12 states that tax some or all of their residents’ social security benefits are Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. Each state has a different policy on taxing these benefits.


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