Hiw To Determine Whether or Not to Pay Taxes on Social Security

[VolvoGirl]

Are you asking about having  federal withholding taken out of your SS?

Up to 85% of Social Security becomes taxable when all your other income plus 1/2 your social security, reaches:

Married Filing Jointly: $32,000

Single or head of household: $25,000

Married Filing Separately: 0

[AmitaR]

The portion of benefits that are taxable depends on the taxpayer's income and filing status.

To determine if your benefits are taxable, take half of your social security benefit for the year and add it to your other income (pensions, wages, interest, dividends, and capital gains etc.)

If you're single and this total comes to more than $25,000, then part of your social security benefits may be taxable.  For married filing joint, if this total comes to more than $32,000, then part of your social security may be taxable. 

• Fify percent of your social security benefits may be taxable if you're Single, HOH, or QW with $25,000-$34,000 income, Married Filing Joint with $32,000-$44,000 income.
• Up to 85% of your social security benefits may be taxable if you're Single, HOH, or QW with more than $34,000 income, Married Filing Joint with more than $44,000 income

For more info:

https://www.irs.gov/newsroom/irs-reminds-taxpayers-their-social-security-benefits-may-be-taxable

[gckennett1]

I thought if you were full retirement age, there would not be that 85% tax

[wagnerconsultinggroupllc]

Is the below correct for 2025?  The link provided above is dated 2022....

In 2025, you can earn up to $23,400 before your Social Security benefits are reduced if you are below your full retirement age. If you will reach your full retirement age in 2025, the limit is $62,160 for the months before you reach that age. After reaching full retirement age, there is no limit on your earnings. 

https://www.ssa.gov/benefits/retirement/planner/whileworking.html#:~:text=Beginning%20with%20the%20m...)

[AmitaR]

Whether Social Security benefits are taxable or not and how much are taxable does not depend on Taxpayer's age, rather it depends on your filing status and combined income as explained earlier. 

[VolvoGirl]

@wagnerconsultinggroupllc   There are 2 different things to know about social security. People get them mixed up all the time. Social Security is saying your SS checks may be REDUCED. Not if it's taxable or not.

1. Your actual SS checks

If you are over full retirement age your actual ss checks won't be reduced. Otherwise they will actually reduce your payments if you make too much other income in the prior year. See SS FAQ for working after retirement
https://www.ssa.gov/benefits/retirement/planner/whileworking.html

It says…
When we figure out how much to deduct from your benefits, we count only the wages you make from your job or your net profit if you're self-employed. We include bonuses, commissions, and vacation pay. We don't count pensions, annuities, investment income, interest, veterans benefits, or other government or military retirement benefits.

Special Earnings Limit Rule
https://www.ssa.gov/benefits/retirement/planner/rule.html

See page 5 for the special first year rule
https://www.ssa.gov/pubs/EN-05-10069.pdf

2. Income Tax (even the first year).

For any age up to 85% of Social Security becomes taxable when ALL your other income plus 1/2 your social security reaches:

Married Filing Jointly: $32,000

Single or head of household: $25,000

Married Filing Separately: 0

[xmasbaby0]

@gckennett1 You age has nothing whatsoever to do with whether your Social Security is taxable.

Up to 85% of your Social Security benefits can be taxable on your federal tax return.  There is no age limit for having to pay taxes on Social Security benefits if you have other sources of income along with the SS benefits.  When you have other income such as earnings from continuing to work, investment income, pensions, etc. up to 85% of your SS can be taxable. 

 What confuses people about this is that before you reach full retirement age, if you continue working while drawing SS, your benefits can be reduced if you earn over a certain limit. (For 2021 it was  $18,960.  For 2022 it was  $19,560  —  for 2023 $21,240)  For 2024, $22,320.  For 2025 it will be $23,400

After full retirement age, no matter how much you continue to earn, your benefits are not reduced by your earnings; your employer will still have to withhold for Social Security and Medicare.  If you work as an independent contractor then you will pay self-employment tax for Social Security and Medicare.

To see how much of your Social Security was taxable, look at lines 6a and 6b of your 2024 Form 1040

https://www.irs.gov/help/ita/are-my-social-security-or-railroad-retirement-tier-i-benefits-taxable

You need to file a federal return if half your Social Security plus your other income is

Single or Head of Household      $25,000

Married Filing Jointly                  $32,000

Married Filing Separately            $0

Some additional information:  There are 9 states that tax Social Security—Colorado, Connecticut,, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont  and West Virginia These states offer varying degrees of income exemptions, but two mirror the federal tax schedule: MN and VT.

IF YOU WANT TO HAVE TAX WITHHELD FROM YOUR SOCIAL SECURITY BENEFITS

https://www.ssa.gov/manage-benefits/request-withhold-taxes

https://www.irs.gov/forms-pubs/about-form-w-4-v

[wagnerconsultinggroupllc]

If filing jointly, if one spouse is collecting Social Security and does not have an earned income, does the earned income of the spouse not collecting Social Security affect the taxability of Social Security benefits received? 

[xmasbaby0]

 When you file a joint tax return, you combine all of your income so the taxability of the SS is based on the total amount of income received between the two spouses.

[dkcaldwell]

My question has to do with tax on SS, so will ask here...

So if I'm understanding the bill that was passed, there is no tax on Social Security? Or is that only for certain incomes? Also, will "no tax" be retroactive to the beginning of 2025 or when does that start? I am currently having taxes taken out of my SS, but wondering if I can cancel this...

Thanks

[xmasbaby0]

@dkcaldwell You misunderstood the recently passed tax laws.   NOTHING has changed in terms of whether your  Social Security can be taxed.  Many people have this misunderstanding.   Your SS is still taxable--just like it has been in the past -- if you have other income, depending on how much other income you have.   

One thing that may help you for the next several years is that each person 65 or older gets an additional $6000 deduction (phased out at certain income amounts), so that may keep some or even all of your SS from being taxable for 2025.   

Up to 85% of your Social Security benefits can be taxable on your federal tax return.  There is no age limit for having to pay taxes on Social Security benefits if you have other sources of income along with the SS benefits.  When you have other income such as earnings from continuing to work, investment income, pensions, etc. up to 85% of your SS can be taxable. 

 What confuses people about this is that before you reach full retirement age, if you continue working while drawing SS, your benefits can be reduced if you earn over a certain limit. (For 2021 it was  $18,960.  For 2022 it was  $19,560  —  for 2023 $21,240)  For 2024, $22,320.  For 2025 it will be $23,400

After full retirement age, no matter how much you continue to earn, your benefits are not reduced by your earnings; your employer will still have to withhold for Social Security and Medicare.  If you work as an independent contractor then you will pay self-employment tax for Social Security and Medicare.

To see how much of your Social Security was taxable, look at lines 6a and 6b of your 2024 Form 1040

https://www.irs.gov/help/ita/are-my-social-security-or-railroad-retirement-tier-i-benefits-taxable

You need to file a federal return if half your Social Security plus your other income is

Single or Head of Household      $25,000

Married Filing Jointly                  $32,000

Married Filing Separately            $0

Some additional information:  There are 9 states that tax Social Security—Colorado, Connecticut,, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont  and West Virginia These states offer varying degrees of income exemptions, but two mirror the federal tax schedule: MN and VT.

IF YOU WANT TO HAVE TAX WITHHELD FROM YOUR SOCIAL SECURITY BENEFITS

https://www.ssa.gov/manage-benefits/request-withhold-taxes

https://www.irs.gov/forms-pubs/about-form-w-4-v