Taxes on Social Security and Distributions

[DCS128]

Hi - In reading the literature referenced earlier, I see that Social Security is taxed 50% - 

"The MAGI includes half of your Social Security, plus other sources of income." 

"Once your MAGI exceeds the base amount for your filing status ($32,000 for Married Filing Jointly)". 

When filing taxes we are able to take a standard deduction of $27,300. Sorry if this is a crazy question but it makes a huge difference. Is the $32000 calculated after you take the standard deduction or before you take the standard deduction? I follow along on the forms when doing taxes but it is important to know in planning for the year! Thank you!

[conniem123]

Hi DCS128,

Great job planning ahead!  When calculating how much of your social security benefits may be taxable the MAGI, or modified adjusted gross income, is prior to the standard deduction.

I hope this information is helpful!

Connie

[Denisev1220]

Good morning, social security benefits can be taxed at a rate of zero to 85%. The literature you are reading is to determine if any of the benefits will be taxable. You calculate 50% of your social security benefits plus other- income to arrive at the limit. This is calculated before your standard deduction or any available credits. I hope this explains the process. Feel free to reply if you still have questions and thank you for participting in this ask the expert event.

[VolvoGirl]

Before th3 Standard Deduction.   And the tax on Social Security can be up to 85% (not 50%).  The 50% is what is added to your other income to determine how much SS is taxable.

https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-benefits/social-security-inco... 

Up to 85% of Social Security becomes taxable when all your other income plus 1/2 your social security, reaches:

Married Filing Jointly: $32,000

Single or head of household: $25,000

Married Filing Separately: 0

More links.....

IRS Pub. 915 on Social Security.  There is a blank worksheet on page 16

https://www.irs.gov/pub/irs-pdf/p915.pdf

The taxable amount of Social Security is a range.

For Single between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.  For more than $34,000, up to 85 percent of your benefits may be taxable.

For Joint between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits.  For more than $44,000, up to 85 percent of your benefits may be taxable.

See,

Benefits Planner | Income Taxes And Your Social Security Benefit | SSA