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Bryanvac
Returning Member

What income is included in the $25k limit?

What income types are included that make your social security taxable?  IE: are IRA/401K withdrawals included?  Capital gains via stock sales?  

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Accepted Solutions
KochuK
Employee Tax Expert

What income is included in the $25k limit?

Hi Bryanvac, good day! Thank you for joining the TurboTax Special Forum.

 

The $25K is a threshold (base amount) to calculate excess income that trigger the taxability of Social Security Benefits. It is a part of formula/worksheet. 

 

A portion of Social Security retirement and disability benefits may be taxable when income exceeds a taxpayer’s base amount. Certain amounts that are nontaxable for regular income tax purposes are added back to determine taxable Social Security benefits. The base amount is determined by the taxpayer’s filing status.

 

MFJ $32,000

Single, HOH, QW, MFS (lived apart from spouse all year) $25,000

MFS (lived with spouse at any time during the year) $0

 

Rate of taxation. Income above a taxpayer’s base amount will result in an inclusion of up to 50% (85% for higher incomes) of the taxpayer’s Social Security benefits on line 6b, Form 1040. If a taxpayer’s income is above the base amount, use the Social Security Benefits Worksheet:

 

Page 16 of IRS Pub 925 - Worksheet 1

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

 

If you examine the worksheet, line 3 description: Combine the amounts from: Form 1040 or 1040-SR, lines 1, 2b, 3b, 4b, 5b, 7; and Schedule 1 (Form 1040), line 9.

They are Wages, taxable interest, ordinary dividends, taxable IRA distribution, taxable pensions and annuities, capital gain (loss up to $3K), Schedule 1 additional income, which are subject to the threshold.

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1 Reply
KochuK
Employee Tax Expert

What income is included in the $25k limit?

Hi Bryanvac, good day! Thank you for joining the TurboTax Special Forum.

 

The $25K is a threshold (base amount) to calculate excess income that trigger the taxability of Social Security Benefits. It is a part of formula/worksheet. 

 

A portion of Social Security retirement and disability benefits may be taxable when income exceeds a taxpayer’s base amount. Certain amounts that are nontaxable for regular income tax purposes are added back to determine taxable Social Security benefits. The base amount is determined by the taxpayer’s filing status.

 

MFJ $32,000

Single, HOH, QW, MFS (lived apart from spouse all year) $25,000

MFS (lived with spouse at any time during the year) $0

 

Rate of taxation. Income above a taxpayer’s base amount will result in an inclusion of up to 50% (85% for higher incomes) of the taxpayer’s Social Security benefits on line 6b, Form 1040. If a taxpayer’s income is above the base amount, use the Social Security Benefits Worksheet:

 

Page 16 of IRS Pub 925 - Worksheet 1

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

 

If you examine the worksheet, line 3 description: Combine the amounts from: Form 1040 or 1040-SR, lines 1, 2b, 3b, 4b, 5b, 7; and Schedule 1 (Form 1040), line 9.

They are Wages, taxable interest, ordinary dividends, taxable IRA distribution, taxable pensions and annuities, capital gain (loss up to $3K), Schedule 1 additional income, which are subject to the threshold.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
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