Taxation of Social Security Benefits

Question: Are Social Security benefits taxable?

Answer: The simplest answer is yes. Social Security income is taxable but paying taxes on your Social Security benefits depends on your income level. However, you will not pay federal income taxes on more than 85% of your Social Security income. To find out what your provisional income is, do the following calculation:  adjusted gross income + tax-exempt interest + half of your Social Security benefits.

If you are a single filer, the limit is $25,000. If you are married and file taxes together with your spouse, you won’t need to pay any Social Security taxes if your provisional income does not exceed $32,000.

If your income is between $32,000 and $44,000 ($25,000 to $34,000 for single fillers), then the IRS can tax up to 50% of your Social Security benefits. If your income exceeds $44,000 ($34,000 for singles), you will pay taxes on up to 85% of your Social Security benefits.

If you want to find out how much of your benefits are taxable, if any, you can use this worksheet provided by the IRS.

See also 11 Social Security Mistakes You Have To Avoid Before You Retire.