![]() ![]() The only withholding options are 7%, 10%, 12% or 22% of your monthly benefit. You will need to enter your personal information and then choose how much to withhold from your benefits. To withhold taxes from your Social Security benefits, you will need to fill out Form W-4V (Voluntary Withholding Request). If you make enough in retirement that you need to pay federal income tax, then you will also need to withhold taxes from your monthly income. Simplifying Your Social Security Taxesĭuring your working years, your employer probably withheld payroll taxes from your paycheck. The 2017 1040-EZ did not allow you to report Social Security income. Note that if you are filing or amending a tax return for the 2017 tax year or earlier, you will need to file with either Form 1040-A or 1040. Then, on Form 1040, you will write the total amount of your Social Security benefits on line 5a and the taxable amount on line 5b. This will be in box 3 of your Form SSA-1099. Luckily, this part is easy. First, find the total amount of your benefits. ![]() Once you calculate the amount of your taxable Social Security income, you will need to enter that amount on your income tax form. How to File Social Security Income on Your Federal Taxes If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now. However, the IRS helps taxpayers by offering software and a worksheet to calculate Social Security tax liability. Things get more complicated if you’re paying taxes on 85% of your benefits. The example above is for someone who is paying taxes on 50% of his or her Social Security benefits. So the taxable amount that you would enter on your federal income tax form is $5,000, because it is lower than half of your annual Social Security benefit. The difference between your combined income and your base amount (which is $25,000 for single filers) is $5,000. Then let’s say you have a combined income of $30,000. Your total annual benefits would be $18,516. Say you’re a single filer who receives a monthly benefit of $1,543, which is the average benefit after the cost of living increase in January 2021. If your combined income was more than $34,000, you will pay taxes on up to 85% of your Social Security benefits. If you file as an individual with a total income that's less than $25,000, you won't have to pay taxes on your Social Security benefits in 2021, according to the Social Security Administration.įor the 2021 tax year (which you will file in 2022), single filers with a combined income of $25,000 to $34,000 must pay income taxes on up to 50% of their Social Security benefits. However, you will never pay taxes on more than 85% of your Social Security income. If your Social Security income is taxable, the amount you pay in tax will depend on your total combined retirement income. Calculating Your Social Security Income Tax If you are married filing separately, you will likely have to pay taxes on your Social Security income. The limit is $25,000 if you are a single filer, head of household or qualifying widow or widower with a dependent child. If your combined income is above a certain limit (the IRS calls this limit the base amount), you will need to pay at least some tax. This number is known as your combined income (combined income = adjusted gross income (AGI) + nontaxable interest + half of your Social Security benefits). Is My Social Security Income Taxable?Īccording to the IRS, the quick way to see if you will pay taxes on your Social Security income is to take one half of your Social Security benefits and add that amount to all your other income, including tax-exempt interest. Regardless, it's a good idea to work with a financial advisor to help you understand how different sources of retirement income are taxed. State laws vary on taxing Social Security. If you rely exclusively on your Social Security checks, though, you probably won't pay taxes on your benefits. If you have other sources of retirement income, such as a 401(k) or a part-time job, then you should expect to pay income taxes on your Social Security benefits. The simplest answer is yes: Social Security income is generally taxable at the federal level, though whether or not you have to pay taxes on your Social Security benefits depends on your income level. ![]()
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