How do I figure the taxes on my social security income if I think my investment income will exceed the limit? Assume social security is 20,000 and investment income is 60,000.
TAX ON SOCIAL SECURITY
Up to 85% of your Social Security benefits can be taxable. 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 is $16,920) 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 line 14b of your 1040A, or line 20b of your 1040
Some additional information: There are a few 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