social security and ira distribution will they be taxed

[kuklitsa79]

Both my parents are over 65 and on social security making a total of 21000 per year in Illinois. My mom wants to pull out money from trad ira a small amt, will she be taxed or will she not  if she stays under 32000 agi ?

please help

[xmasbaby0]

Illinois does not tax retirement income so no state tax will be due.

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 will be $17,040—for 2019 it will be $17,640— for 2020 it will be $18,240)  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.

[ColeenD3]

The standard deduction for both spouses over age 65 is $27,400, not $32,000 for Federal purposes. You are confusing the limit for social security with the filing requirement for all income. Any amount, which includes half of their social security, over that amount will be taxable.

Married filing jointly, both spouses 65 or older

$27,400

[kuklitsa79]

Thanks for the response.

Totally confused with these numbers .

So If she only pulls out 10k from ira plus half of ss income (10.5K) =20.5K

Does she have to file taxes ? no right because they are under the 27 mark?

[DanaB27 · Accepted solution]

 No, they will not have to file a return because they would be under the filing threshold because in this case only the IRA distribution would be taxable. 

Please see Is my Social Security income taxable?  and Do I need to file a federal return this year? for additional information.