Estevano_
Returning Member

Social Security Benefits

Humphrey determined that IRS was taxing his $18000 social security benefits $4288. How much social security benefits will Humphrey declare on his California tax return? (This is a question on a Califonia Tax Preparer practice test butI feel it makes no sense)

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California does not tax Social Security.

 

  There are 13 states that tax Social Security—Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont, and West Virginia.  These states offer varying degrees of income exemptions, but four mirror the federal tax schedule: MN, ND,VT, and WV

 

TAX ON SOCIAL SECURITY

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 2017 that limit was $16,920 —for 2018 it was $17,040—for 2019 it was $17,640— for 2020 it is $18,240; for 2021 it is $18,960)  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.

To see how much of your Social Security was taxable, look at lines 6a and 6b of your 2020 Form 1040

 

https://ttlc.intuit.com/questions/1899144-is-my-social-security-income-taxable

 

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 $25,000 when filing single or head of household, or $32,000 when filing married filing jointly, $0 if you are filing married filing separately.

 

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

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Social security benefits are not taxable by the State of California.

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It is a "trick question" that puts in a lot of info you don't need ... like if the grass is green and your house is red what color is the sky?  Learn to get to the base question and ignore the extra words.  

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@Critter-3 @DoninGA 

See user's other threads--user is posting homework questions.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

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Yes he is ... and he can go back to his text book now with some  more test taking tips ...

 

READ the entire question out loud slowly so you can hear it ... don't skim ... read every little word and see if you can find out what the question is really asking.

 

Is it looking for the false/true answer ? 

 

Read the answers first if it is a multiple guess test , then read the question and see if you can at least eliminate 2 of the 4 then take a best guess of the other 2  AFTER you read the entire question again. 

 

If you can skip the questions you are not 110% sure of then complete the rest and come back to those you skipped ... many times question 100 will give you the answer for question one. 

 

And beware of absolutes like   ALWAYS & NEVER since those are very uncommon in income tax laws.