Are Your Social Security Benefits Taxable?

 In Blog, Educational Issues

Are your Social Security Benefits taxable?  If you receive Social Security, it’s good to know whether or not you’re going to be taxed so you can plan ahead to cover your taxes.

Here are seven tips about how Social Security affects your taxes:

1. If you received these benefits in 2013, you should have received a Form SSA-1099, Social Security Benefit Statement, showing the amount.

2. If Social Security was your only source of income in 2013, your benefits may not be taxable.  You also may not need to even file a federal income tax return.

3. If you get income from other sources, then you may have to pay taxes on some of your benefits.

4. If you are receiving Social Security benefits before you reach 65 and still working, you may also have to repay a portion of your earned income.  If your wages or self-employment income exceed a certain threshold — $15,120 for year 2013 — then your Social Security income is reduced by $1 for every $2 of earnings over the threshold.

4. Your income and filing status affect whether you must pay taxes on your Social Security.

5. One way to find out if your benefits are taxable is to use IRS Free File to prepare and e-file your tax return.  If you made $58,000 or less, you can use Free File tax software.  The software will figure the taxable benefits for you.  If your income was more than $58,000 and you feel comfortable doing your own taxes, use Free File Fillable Forms.  Free File is available only at IRS.gov/freefile.  Another way, would be to give us, Bressler & Company, a call at 559.924.1225 give us your situation, and we could tell you whether or not you will need to file and if your income, or any part of it, is taxable.

6. If you choose to file a paper return yourself, you can visit IRS.gov and use the Interactive Tax Assistant Tool to see if any of your benefits are taxable.

7. A quick way to find out if any of your benefits may be taxable is to add one-half of your Social Security benefits to all your other income, including any tax-exempt interest.  Next, compare this total to the base amounts below.  If your total is more than the base amount for your filing status, then some of your benefits may be taxable.

The three base amounts are:

  • $25,000 – for single, head of household, qualifying widow or widower with a dependent child or married individuals filing separately who did not live with their spouse at any time during the year
  • $32,000 -for married couples filing jointly
  • $0 – for married persons filing separately who lived together at any time during the year

For more on this topic, give Bressler & Company a call at 559.924.1225, or visit IRS.gov.

 

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