Taxable Social Security Benefits for 1st year of retirement

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On 1040  Line 6A and 6B lists social security benefits and taxable social security benefits. 

In the 1st year of early retirement, my income stopped before social security started and I received $5180 in social security in 2024 4Q.  Turbo Tax is showing this as 85% taxable at $4403. I thought this was an exception for the 1st year recipient of social security after income has stopped that social security would not be taxable if income after the start of receiving social security benefits was less than  $32000 for joint filers.  I had no new income after starting social security.   Please clarify.   It seems that the timing of income ahead of social security benefits starting does not matter in this regard.

2nd question, I completed the social security benefits worksheet and it shows the taxable amount at 50%   $2590.  If this is correct,  this is no way to manual adjust the turbo tax calculation from 85% to 50%. Is there a way to update 1040A 6B based on the worksheet.  Thanks,

[xmasbaby0]

You misunderstood the part about SS not being taxable. during the first year.   It is --- or can be.   During the first year, your benefits will not be reduced by continuing to work.   But if you have other income while receiving SS benefits, up to 85% of your SS can be taxable.

FIRST YEAR OF SOCIAL SECURITY

People get really confused when they start getting SS.   If you are not full retirement age, SS can reduce your benefits if you earn over a certain amount.  But they do not do that during the FIRST year that you transition from working to getting SS.  After that, if you are not full retirement age, they can reduce your benefit if you continue to work and earn over the limit.

None of that means that your SS is not taxable during the first year.   It is.   If you receive other income while receiving SS, your SS can be taxable.   If you were expecting SS to be "tax free" the first year, you were mistaken about how it works.

FIRST YEAR OF SS RULES

https://faq.ssa.gov/en-US/Topic/article/KA-01927?msclkid=11bc282ccf2211ecb65078152b05ae6b

https://www.ssa.gov/pubs/EN-05-10069.pdf

[ThomasM125]

There is no rule as you mention exempting tax on social security in the first year of retirement. It is possible you are confused regarding the amount of benefits receivable or the affect your income has on the benefits you receive in the first year of receiving benefits. 

No, there is no way of changing the amount of benefits showing as taxable on your tax return. If the taxable amount of benefits listed on your return is wrong, the IRS would correct it when you file your tax return, as the calculation would be done by them independent of what you entered on the tax return. As such, they would adjust your return to reflect the correct amount of taxable benefits and correct your tax accordingly.