How Much of Social Security is Taxable If Still Working

by Junior Boomer on November 30, 2010

Some people are genuinely surprised when they learn that their social security income can be taxed. In certain instances, they may not have factored tax payments into their retirement planning. In other instances, people may continue working even though they’re eligible for social security benefits.
How Much of Social Security is Taxable If Still Working
Creative Commons License photo credit: mikeg626

Tax Rates and Social Security

There are a few factors that will be used to determine what of tax rates you’ll follow when paying on social security. The two top ones are total income and marital status. When it is time to pay these taxes, you will need to pick up a Form SSA-1099. The form will outline total benefits, but if you wish to know how much is taxable will require doing some calculations.

Social Security as Your Only Source for Income

Before looking at how much might be taxable if you are still working, you need to understand something first:

If the only income you have for a given year is Social Security income, the benefits remain non-taxable.

In fact, you may not need to file a federal income tax return. The IRS includes monthly survivor and disability benefit, but doesn’t include additional security income payments, which aren’t taxable. It is the other income that comes in that may subject you to taxes on a portion of your government benefits.

The Numbers and Social Security

If you want to know your potential tax liability, you should start by adding about half of your Social Security benefits to other income. There are additional factors that must be accounted for at this stage. You’ll need to record tax-exempt interest earned, savings bond interest, and other benefits that could be excluded for whatever reason. If you come up with a figure that larger than the base for your filing status, then you’ll to pay taxes on the difference.

Base numbers are $25,000 for a single head of household or widow/widower with a dependent, $25,000 for married filing separately who did not live together during the tax year, and $32,000 for married couples filing jointly. Finally, there is no charge for married persons filing separate returns that who lived together during the tax year.

All of this makes up the raw data when you want to find out how much your social security will be taxed. It’s possible for up to half of your Social Security benefits to be taxed if you’re a single filer and your total income plus half the benefits exceeds $34,000. The number is $44,000 if you’re married and have filed jointly.

Can’t Avoid It

There’s no getting around the fact that you’ll have to pay taxes on Social Security if you income falls into the sort of rates and guidelines outlined here and in the IRS’s latest tax charts. You’ll really have to do the math to see where you fall. Check out the IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits for more details.

It is important to take the time find out as much as you can so you pay the appropriate taxes on income received during a given tax year, so you do not take off more of your benefits than is necessary.

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