People who receive Social Security benefits may share the common question – is my Social Security income taxable? Does it baffles you, too? If it does, keep reading and you will get the point soon!
Overall, if you receive Social Security benefits while earning income from other sources, and your combined income exceeds a certain base amount, a part of your Social Security income will be taxable. On the contrary, when you rely on Social Security as the only source of income, you tend not to be taxed. Moreover, if you receive Social Security benefits, you will also be sent a Form 1099-SSA, showing the total dollar amount of benefits you received in the previous year. It can tell you how much Social Security income you shall report when you file a tax return.
More specifically, Social Security income includes: (1)pension; (2)monthly retirement benefits; (3)survivor benefits; (4)disability benefits. As mentioned above, to have your Social Security income not taxed, your combined income shall be less than a certain amount. The calculation is like this: half of your Social Security income is added to all your other income (including non-taxable interest and other excluded income). Then you need to compare this figure to the base amount for your filing status. For example, your total must be less than $25,000 if you file in the status of (1)Single; (2)Head of Household; (3)Qualifying Widow(er) with Dependent Child; (4)Married Filing Separately (when the spouses do not live together for the whole year). If you file in the status of Married Filing Jointly, your gross income needs to be less than $32,000.
If your total income exceeds the base amount, you need to pay some taxes. Under this circumstance, you could use Form 1040 and follow the instructions to file your tax return.