It use to be so simple: Social Security benefits were tax-free. But then as a part of a "Let's Save Social Security" plan, Congress decided to tax up to 50% of your benefits. Later Congress decided to tax up to 85%, allowing the extra revenue to go shore up Medicare.
So will your benefits be taxed?
If you receive social security benefits, a portion of your benefits may be taxable. If the social security benefits were your only source of income for the year, then chances are the benefits are not taxable but if your received income from other sources you may have to pay taxes on a portion of those benefits. So let’s look at a quick way to determine if any of your benefits are taxable.
If you received benefits, you should have received a Form SSA-1099 Social Security Benefits Statement, showing the amount of benefits. Take one-half of your Social Security benefits and add it to all your other income, including any tax-exempt interest (e.g. interest from municipal bonds and qualified U.S. savings bonds). Now compare this total to the base amounts below. If your total is more than the base amount for your filing status, then some of your benefits may be taxable.
- $25,000 - for single, head of household, qualifying widow or widower with a dependent child or married individuals filing separately who did not live with their spouse at any time during the year
- $32,000 -for married couples filing jointly
- $0 - for married persons filing separately who lived together at any time during the year
- John H. Adair
- Adair Advisory Group
Tags:John H. Adair, Adair Advisory Group, Social Security Benefits, Tax