How Federal Taxes Affect Social Security Benefits

by Clauson on September 8, 2017



After you’ve been approved for Social Security benefits, you may wonder about the specifics of the amount that you’ll receive. In addition to the amount that you paid in over the course of working, you need to consider the effect that federal taxes has on Social Security benefits. Federal taxes on income can come into play if you are working or have other income. This depends on how much you make apart from the benefits you receive.

Federal Taxes Affect Social Security Benefits

Keep this information in mind about federal taxes on Social Security benefits:

a) If you are earning income that is considered substantial, this will affect the federal income taxes on your benefits.
Additional income can affect whether you will be subject to taxes. This depends on whether or not your income is considered substantial. There are different amounts depending on if you have a spouse and how you file your taxes.

b) You will not need to worry about your entire benefits being taxed.
No matter how much extra money you make, the entire amount will not be taxed.

c) If you make a combined income between $25,000 and $34,000 and file as an individual, the following applies:
Up to 50 percent of your combined income can be taxed. If you make more than this, up to 85 percent can be taxed.

d) If you have a total combined income between you and your spouse of between $32,000 and $44,000 and file jointly, the following applies:
You will have to pay federal income tax on up to 50 percent of your Social Security benefits. If you have a combined income over this, the percentage can go up to 85.

You will probably have to pay taxes on your Social Security benefits if you and your spouse decide to file separate tax returns instead of filing jointly.

e) Combined income has a specific meaning.
The phrase “combined income” from above combines a few different pieces. It adds half of your Social Security benefits with your nontaxable interest as well as your adjusted gross income.

f) Use your Social Security Benefit Statement {Form SSA-1099} to help you.
The SSA-1099 will help you complete your federal income tax return and find out if these benefits are taxable.

The guidelines above will help you determine your federal taxes on your Social Security benefits. If you have any questions in regards to the information above or applying for benefits, please contact us.

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