Tax Tip 2022: Your Social Security Benefits May Be Taxable
Determining Which Benefits Are Taxable
Tax season is here again. If you receive Social Security income, your tax situation may be a little more complicated. According to the IRS, if you receive Social Security benefits, some of those benefits may be taxable. Social Security benefits include disability, retirement, and survivor benefits. Supplemental Security Income (SSI) payments are not included as they are not taxable.
Do you know how much of your income is taxable? Your income and filing status will determine both whether your benefits are taxable and, if they are, what portion you must pay taxes on. You need to perform one of the two following equations to determine if your benefits are taxable. Select the equation that best matches your filing status.
Equations to identify if your benefits are taxable:
- If you are single, take half of the Social Security income collected during the year and add it to your other income*
- If you are married filing jointly, take half of your Social Security income plus half of your spouse's Social Security income and add it to the rest of your combined income from other sources*
*Note: your other income may include pensions, wages, interest, dividends, and capital gains.
Your Social Security benefits may be taxable if:
- You are single, and your total from the above equation is more than $25,000
- You are married filing jointly, and your total from the above equation is more than $32,000
Do I Pay Taxes on 50% or 85% of My Social Security Benefits?
After determining if your Social Security benefits are taxable, you will next need to determine what portion of them are taxable. When taxing Social Security income, you will either pay taxes on 50% or 85% of your benefits. See below to determine what portion you will pay taxes on.
50% of your benefits may be taxable if you are filing as:
- Single, head of household, or qualifying widow or widower with an income of $25,000 to $34,000
- Married, filing separately, and lived apart from their spouse for all of 2021 with an income of $25,000 to $34,000
- Married filing jointly with an income of $32,000 to $44,000
Up to 85% of your benefits may be taxable if you are filing as:
- Single, head of household, or qualifying widow(er) with an income of more than $34,000
- Married, filing jointly with an income of more than $44,000
- Married, filing separately, and lived apart from their spouse for all of 2021 with an income of more than $34,000
- Married, filing separately, and lived with their spouse at any time during 2021
Where To Go for Tax Help
It is incredibly important that your taxes are filed accurately and on time. If you are struggling with your taxes, it is recommended that you work with a certified tax preparer or a CPA. You can also receive free tax help from the IRS online or over the phone. They can help you get the correct forms, order instructional materials, and determine whether you need to file. In some cases, you may even be able to receive free in-person assistance with your returns through Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE).
The IRS also has many free online resources to help answer your tax questions, including:
- Social Security Income
- Are My Social Security or Railroad Retirement Tier I Benefits Taxable?
- Publication 915, Social Security and Equivalent Railroad Retirement Benefits
Don't forget: the filing deadline to submit your 2021 income taxes is Monday, April 18th, 2022. For taxpayers requesting an extension, their extended filing deadline is Monday, October 17th, 2022.
If you run into trouble with your taxes or are charged with a tax crime, such as failure to file, reach out to Brandon Gardner & Associates, PLC. We are here to help when you need us most.