Are Social Security Benefits Taxable? | Business
If taxpayers receive Social Security benefits, they may have to pay federal income tax on part of those benefits. These IRS tips will help taxpayers determine if they need to do so.
- Form SSA-1099. If taxpayers received Social Security benefits in 2016, they should receive a Form SSA-1099, Social Security Benefit Statement, showing the amount of their benefits.
- Only Social Security. If Social Security was a taxpayer’s only income in 2016, their benefits may not be taxable. They also may not need to file a federal income tax return. If they get income from other sources, they may have to pay taxes on some of their benefits.
- Free File. Taxpayers may use IRS Free File to prepare and e-file their tax returns for free. If they earned $64,000 or less, they can use brand-name software. The software does the math for them, which helps avoid mistakes. If taxpayers earned more, they can use Free File Fillable Forms. This option uses electronic versions of IRS paper forms. It’s best for people who are used to doing their own taxes. Free File is available only by going to IRS.gov/freefile.
- Interactive Tax Tools. Taxpayers can get answers to their tax questions with this helpful tool, Are My Social Security or Railroad Retirement Tier I Benefits Taxable, to see if any of their benefits are taxable. They can also visit IRS.gov and use the Interactive Tax Assistant tool.
- Tax Formula. Here’s a quick way to find out if a taxpayer must pay taxes on their Social Security benefits: Add one-half of the Social Security income to all other income, including tax-exempt interest. Then compare that amount to the base amount for their filing status. If the total is more than the base amount, some of their benefits may be taxable.
- Base Amounts. The three base amounts are:
- $25,000 – if taxpayers are single, head of household, qualifying widow or widower with a dependent child or married filing separately and lived apart from their spouse for all of 2016
- $32,000 – if they are married filing jointly
- $0 – if they are married filing separately and lived with their spouse at any time during the year
This information is not intended to be a substitute for specific, individualized tax advice as individual situations will vary. Royal Alliance Associates, Inc., Georgetown Capital and its advisors are not engaged in rendering tax advice.
These links are provided as a convenience and for informational purposes only. We assume no liability for any inaccuracies, errors or omissions in or from any data or other information provided on the pages, or for any actions taken in reliance on any such data or information.
Prepared by the IRS. For more information go to www.irs.gov.
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Joseph V. Curatolo, President of Georgetown Capital Group
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Phone #(716) 633-9800 Toll Free 1 (800) 648-8091 Fax #(716) 633-9789