You’re retired and collect social security. Did you know that social security is taxed? But how do you determine how much gets taxed? Let’s review so it’s clear how much social security is taxed.

If you’re making more than $25,000 as an individual or $32,000 as a married couple filing jointly, you’ll need to pay federal income taxes on your Social Security benefits. But don’t worry, if your income is below those thresholds, your benefits won’t be taxed. And that applies to spousal benefits, survivor benefits, Social Security Disability Insurance (SSDI), and retirement benefits.

How much Social Security is taxed depends on how much you make. That’s right. Social security taxation varies according to income.

Social Security is taxed according to income.

social security is taxed - Tax Queen

Here’s the deal: if you’re an individual and your income is between $25,000 and $34,000, or if you’re a married couple filing jointly and your income is between $32,000 and $44,000, up to 50 percent of your benefits will be taxed. But if you make more than $34,000 as an individual or $44,000 as a couple, up to 85 percent of your benefits can be taxed.

Oh, and by the way, nobody has to pay taxes on more than 85 percent of their Social Security benefits, regardless of their income. So that’s a relief!

It’s worth noting that about 56 percent of Social Security recipients actually owe income taxes on their benefits, according to the Social Security Administration. So you’re not alone if you have to pay some taxes on your Social Security income.

Now, when determining how the IRS treats your Social Security payments, they look at your adjusted gross income, nontaxable interest income, and half of your Social Security benefits. You can use the IRS’s online tool to figure out how much of your Social Security is taxed.

But wait, there’s more!

Besides federal income taxes, twelve states also tax Social Security to some extent. These states include Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Vermont, Utah, and West Virginia. Each state has its own rules and exemptions based on age or income.

For example, Colorado allows up to $24,000 of retirement income including Social Security to be tax-free. This is for each taxpayer. Therefore, a single taxpayer in Colorado would have a reduction of income by up to $24,000 and a married couple could have a reduction of up to $48,000 in retirement income. That’s not too bad.

Some states are even getting rid of taxes on benefits for older residents. If you want the nitty-gritty details on how benefits are taxed in your state, you should reach out to your state tax agency.

Let’s shift gears and talk about some exceptions.

If your child receives social security dependent or survivor benefits, rest assured that those payments don’t count as taxable income for you. However, if your child has sufficient income from social security and other sources that requires them to file their own tax return, then those benefits might be taxable for them. On a positive note, Supplemental Security Income (SSI) is never subject to taxation. So, you can breathe a sigh of relief if you’re receiving SSI benefits.

If you do end up owing taxes on your benefits, you have a couple of options.

First, you can file quarterly estimated tax returns with the IRS to stay on top of your tax obligations. This option allows you to make regular payments throughout the year, minimizing the financial burden when tax season rolls around.

Second, you can request that social security withhold federal taxes directly from your benefit payment. This way, you can ensure that a portion of your benefits is allocated towards taxes, simplifying the process for you.

In conclusion, it’s important to remember that social security benefits can be subject to taxation based on your income level. However, the percentage of benefits that are taxed depends on your income bracket. As always, consult with your tax professional or utilize IRS resources to ensure you understand and meet your tax obligations.

Stay informed, plan wisely, and make the most of your hard-earned benefits!

RV Tax Queen

I’m a numbers person—but don’t let that scare you. I’ve been an enrolled agent (EA) since 2014 and a nomadic business owner since 2016. Because I’m a nomad myself, I know exactly how stressful life on the road can be.

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This website is for general information only and is not intended to substitute for obtaining legal, accounting or financial advice. It is not rendering legal, accounting or other professional advice. Presentation of the information on this website is not intended to create a client relationship. For specific tax assistance please consult a tax professional on an individual basis.

While I make every effort to furnish accurate and updated information, I do not guarantee that any information contained in this website is accurate, complete, reliable, current or error-free. I assume no liability or responsibility for any errors or omissions in its content.


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