Social Security

[salbeach]

I am a single/divorced female. I will be turning 65 on August 4, 2023. I have been on unemployment since March of this year. I still do not have a job, so I am considering applying for my social security. I will be 65 once I begin my SS. I am told that my SS income will be $2300 per month. Will I need to pay taxes on this income? If so, how do I know how much? I live in the state of Washington and we do not have state taxes. 

If I work a part time or full time job while on social security, what happens?

Sandra

[ClarissaA · Accepted solution]

Hello Sandra! 

Whether or not your Social Security income is taxable depends on your total income, including your Social Security plus any other income. Generally speaking, if your only income is Social Security, you probably won't make enough money to be required to file a federal tax return.  Most states will stop your unemployment benefits once you are receiving social security (because the unemployment is intended to be a safety net while you are looking for work.) 

When you have additional income combined with Social Security benefits, part of your Social Security benefit may be taxable.  This is determined by adding all your other income sources together with your Social Security income for the year.  As you mentioned you are divorced, I will assume you will file your return as either single or head of household.  

When you add your Social Security benefits to all other income sources, if the total is more than $25,000 for the year, part of your Social Security benefits will be taxable.  The amount will change depending on how much additional income you report over the $25,000 threshold for the year.    If your combined income is between $25000 and $34000, you may be subject to income tax on up to 50% of your Social Security benefits.  If you total combined income for the year is over $34,000 you could be subject to income tax on 85% of your Social Security benefits.  It's worth noting that is the amount of the benefit subject to tax, not the actual tax rate on the income.  

Based on the information you provided, if you are receiving $2300 monthly in Social Security, and that is your only income for the year, you will be slightly over the $25,000 threshold and a small portion of your benefits would be taxable.  If you do continue to work either part- or full-time, you will subject additional portions of your Social Security benefits to taxation.   A financially-savvy retiree would have at least some voluntary tax withholding taken out when she starts receiving benefits.   

[rbtax2015]

I believe it is half of SS amount would be added to other income. Is this not correct?

[Cate9]

You will pay tax on only 85 percent of your Social Security benefits, based on Internal Revenue Service (IRS) rules. If you:

• file a federal tax return as an "individual" and your combined income* is
  • between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
  • more than $34,000, up to 85 percent of your benefits may be taxable.
• file a joint return, and you and your spouse have a combined income* that is
  • between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits.
  • more than $44,000, up to 85 percent of your benefits may be taxable.
• are married and file a separate tax return, you probably will pay taxes on your benefits.

https://www.ssa.gov/benefits/retirement/planner/taxes.html#:~:text=between%20%2425%2C000%20and%20%24....