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Tax858
Returning Member

Taxes on Social Security

When taking social security benefits, do you claim 50% of the annual social security amount as ordinary income? And do you pay taxes on social security 4 times a year when making estimated payments?

3 Replies
Critter-3
Level 15

Taxes on Social Security

 

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.

 

To see how much of your Social Security was taxable, look at lines 5a and 5b of your Form 1040

 

Some additional information:  There are 13 states that tax Social Security—Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont, and West Virginia.  These states offer varying degrees of income exemptions, but four mirror the federal tax schedule: MN, ND,VT, and WV

The program will calculate the taxable portion automatically ...  

See page 7 in this IRS pub for the worksheet for estimation purposes : 

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

xmasbaby0
Level 15

Taxes on Social Security

Social Security sends you a SSA1099 each year in late January/early February.  You enter that SSA1099 on your tax return.  Depending on whether you have any other income in addition to the Social Security, the SS benefits may or may not be taxable.  But you enter the SSA1099 exactly as it appears.   You do not subtract 50% --- you let the software do all of the calculations for you

 

 

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 2017 that limit was $16,920 —for 2018 it was $17,040—for 2019 it was $17,640— for 2020 it is $18,240; for 2021 it is $18,960,  (For 2022 it will be $19,560) 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.

 

To see how much of your Social Security was taxable, look at lines 6a and 6b of your 2021 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 13 states that tax Social Security—Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont, and West Virginia.  These states offer varying degrees of income exemptions, but four mirror the federal tax schedule: MN, ND,VT, and WV

**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.**
Tax858
Returning Member

Taxes on Social Security

So if you have other ordinary income (i.e. dividends, capital gains), plus social security benefits, does 50% of your social security benefit amount paid annually (whatever that amount is), included as income? I’m trying to figure out what the amount I have to be below, if I only have social security benefits, dividends, and capital gains as income, to pay zero on capital gains tax (I believe it’s below $41,675 for 2022) and if 50% of your social security benefit is included in the $41,674 total. 

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