Many taxpayers receiving Social Security benefits may be wondering if this income is taxable. If you receive Social Security benefits, then you may have to pay federal income tax on part of those benefits. The IRS offers the following tips to help taxpayers determine if they need to pay taxes on Social Security benefits.
- If you received Social Security benefits in 2016, then you should receive a Form SSA-1099, Social Security Benefit Statement, showing the amount of the benefits.
- If Social Security was your only income in 2016, your benefits may not be taxable. And you also may not need to file a federal income tax return. However, if you receive income from other sources, you may have to pay taxes on some of your benefits.
- Determine if you must pay taxes on Social Security benefits using the following formula: Add one-half of the Social Security income to all other income, including tax-exempt interest. Then compare that amount to the base amount for you filing status. If the total is more than the base amount, some of the benefits may be taxable.
The three base amounts:
$25,000 – if taxpayers are single, head of household, qualifying widow or widower with a dependent child or married filing separately and lived apart from their spouse for all of 2016;
$32,000 – if they are married filing jointly; and
$0 – if they are married filing separately and lived with their spouse at any time during the year.
Determining is you owe tax on Social Security benefits can be confusing. We are here to walk you through the process.
