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Level 2
February 15, 2023
Question

Social Security Taxability

  • February 15, 2023
  • 2 replies
  • 15 views

Married filing jointly. Both born in 1955.  $47,268 in w-2/pension income.  $38,448 in social security income. 

Why is $27,174 of the social security taxable? Doesn't being full retirement age mean anything?

2 replies

CatinaT1
Level 15
February 15, 2023

Dependent upon your other income, up to 85% of your social security can become taxable. You will see below how to figure if you have taxable social security, or you can visit IRS.gov and use the Interactive Tax Assistant tool. 

 

  • Tax Formula.  Here’s a quick way to determine if a taxpayer must pay taxes on their Social Security benefits: Add one-half of the Social Security income to all other income, including tax-exempt interest. Then compare that amount to the base amount for their filing status. If the total is more than the base amount, some of their benefits may be taxable. 
     
  • Base Amounts. The three base amounts are: 
    • $25,000 – if taxpayers  are single, head of household, qualifying widow or widower with a dependent child or married filing separately and lived apart from their spouse for all of the tax year 
    • $35,000 – if they are married filing jointly 
    • $0 – if they are married filing separately and lived with their spouse at any time during the year 
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Hal_Al
Level 15
Level 15
February 15, 2023

Q. Doesn't being full retirement age mean anything?

A.  No.

 

Q. Why is $27,174 of the social security taxable?

A.  That's the calculated amount, in your case; somewhere between 50% and 85% of your social security payments.  See the social security worksheet for calculation details. 

 

Social security only becomes taxable when added to sufficient other income. If you are otherwise required to file a tax return, you do need to enter it in TurboTax (TT). TT will determine the taxable portion.

Social security (including SSDI) becomes taxable when your income, including 1/2 your social security, reaches:

Married Filing Jointly(MFJ): $32,000

Single or head of household: $25,000

Married Filing Separately and lived with your spouse at any time during the tax year: $0

After TurboTax (TT) calculates the taxable portion of SS, it puts the total amount of SS on line 6a of form 1040 and the taxable amount on line 6b (2020-2). TT also produces a worksheet  to show how the taxable amount is calculated. Although most people pay tax on 85% of their SS. it can be less for lower income taxpayers.

 

For the first  $9,000 (12,000 MFJ), only 50% of your SS is taxed. After that 85% is taxed. And gradually the  50% taxed  is replaced with the 85%. It's the government; they make it complicated. See IRS Publication 915. When TT prints out your return, it will provide you with the  IRS social security worksheet showing you how the taxable amount was calculated.  See the worksheet at page 14 at

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