Roughly 40% of individuals collecting Social Security are required to pay federal income taxes on these benefits. This situation typically occurs when there is additional substantial other income to be reported on the tax return. This income would be from interest, dividends, wages, self-employment income, and other taxable sources.
Do You Have Taxable Social Security Benefits?
Depending on your filing status and combined income, you may have to pay tax on 50% or up to 85% of your Social Security benefits. However, it is important to note that under any circumstances, a minimum of 15% of your Social Security income is not subject to federal income taxes.
Amount Taxed
The following table serves as a guide to assist you in determining whether your social security income is subject to taxation and the potential amount of income tax you may be required to pay.
Social Security Income Tax Percentage Based on Filing Status and Combined Income
| Filing Status | Combined Income | Amount Taxed (Up To) |
|---|---|---|
| Individual | $25,000 – $34,000 | 50% |
| Individual | $34,000 + | 85% |
| Joint Return | $32,000 – $44,000 | 50% |
| Joint Return | $44,000 + | 85% |
Combined Income
Your combined income can be found using the following equation:
Your adjusted gross income (without your Social Security benefits) + nontaxable interest + ½ of your Social Security benefits = Your combined income
Paying Your Social Security Tax
The Form SSA-1099, also known as the Social Security Benefit Statement, details the benefits received in the previous year. This statement is issued every January and can be utilized when completing your federal income tax return. If you are required to pay taxes on your Social Security benefits, you can choose to have federal taxes to be withheld directly from your benefits or you can make quarterly estimated tax payments to the IRS.
If you receive Social Security benefits, our team of accounting professionals is ready to offer expert guidance on strategies to minimize your taxable income.
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