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What is the work around when Turbo Tax is incorrectly calculates taxes on Social Security benefits.

Why does Turbo Tax calculate taxes on Social Security?
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What is the work around when Turbo Tax is incorrectly calculates taxes on Social Security benefits.

Why do you think the calculations are incorrect?

 

 

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 2019 it was $17,640— for 2020 it was $18,240; for 2021 it was  $18,960.  For 2022 it was  $19,560    for 2023 $21,240)  For 2024, $22,320.

 

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.  If you work as an independent contractor then you will pay self-employment tax for Social Security and Medicare.

 

To see how much of your Social Security was taxable, look at lines 6a and 6b of your 2023 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.

 

 

 

Some additional information:  There are 11 states that tax Social Security—Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont  These states offer varying degrees of income exemptions, but two mirror the federal tax schedule: MN and VT.

 

The tax laws for 2024 will change——for  tax year 2024 Missouri and Nebraska will no longer tax SS

 

 

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
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