Many people who receive social security benefits begin to worry when tax season comes around. They ask themselves, “Are my social security benefits taxable?” The answer to this question could be yes or no, but it not complicated to figure out if your social security benefits are taxable, and if they are, what percentage of these benefits will be taxed.
If your social security benefits are the only income you receive, then they will not be taxed.
If you have other income that you personally earn or have a spouse that earns income, then part of your social security benefits may be taxable. Some examples of other sources of income are earnings from employment, interest, or dividends.
Base rates are used to figure how much of your social security benefits are taxable. First, add one half of your social security benefits to your other income. This new total will determine your tax rate percentage.
After making this calculation, if your annual income is between $25,000 and $34,000 and you’re filing single, then 50% of your benefits will be taxed. This percentage also applies if you are a married filer and have an income between $32,000 and $44,000.
For single filers whose income is more than $34,000 and married filers who earn more than $44,000, a taxable rate of 85% will be applied to benefits received.
Visit the IRS website to get more information about the taxation of social security benefits. IRS Publication 915 gives you worksheets to figure taxable income as well as any additional information you may need to figure out the tax rate and how it applies to your benefits.