Not quite. A quick way to find out if any of your benefits may be taxable is to add one-half of your Social Security benefits to all your other income, including any tax-exempt interest. Next, 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. The three base amounts are:
- $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
Depending on your income and filing status, up to 85% of your Social Security benefit can be taxable:
- If you're single, a combined income between $25,000 and $34,000 means that up to 50% of your benefits could be taxable. A combined income greater than $34,000 means that up to 85% of your benefits could be taxable. Of course, if your combined income is less than $25,000, none of your Social Security benefits are subject to tax, as I discussed in the previous section.
- If you're married and file a joint tax return, then a combined income between $32,000 and $44,000 puts you in the 50% taxable range, and income over $44,000 means that up to 85% of your benefits are taxable.
- If you're married and file separately, up to 85% of your benefits can be taxed, regardless of your income.
Notice that I said "up to" 50% or 85% of your benefits is taxable. It's not a simple of multiplication, and there are several variables that determine the actual amount of taxable Social Security benefits.