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Are Social Security Benefits Taxable? – Maybe

Are Social Security Benefits Taxable?

If taxpayers receive Social Security benefits, they may have to pay federal income tax on part of those benefits. These IRS tips will help taxpayers determine if they need to do so.

  • Form SSA-1099.  If taxpayers received Social Security benefits in 2016, they should receive a Form SSA-1099, Social Security Benefit Statement, showing the amount of their benefits.
  • Only Social Security.  If Social Security was a taxpayer’s only income in 2016, their benefits may not be taxable. They also may not need to file a federal income tax return. If they get income from other sources, they may have to pay taxes on some of their benefits.
  • Interactive Tax Tools.  Taxpayers can get answers to their tax questions with this helpful tool, Are My Social Security or Railroad Retirement Tier I Benefits Taxable, to see if any of their benefits are taxable. They can also visit IRS.gov and use the Interactive Tax Assistant tool.
  • Tax Formula.  Here’s a quick way to find out if a taxpayer must pay taxes on their Social Security benefits: Add one-half of the Social Security income to all other income, including tax-exempt interest. Then compare that amount to the base amount for their filing status. If the total is more than the base amount, some of their benefits may be taxable.
  • Base Amounts. The three base amounts are:
    • $25,000 – if taxpayers  are single, head of household, qualifying widow or widower with a dependent child or married filing separately and lived apart from their spouse for all of 2016
    • $32,000 – if they are married filing jointly
    • $0 – if they are married filing separately and lived with their spouse at any time during the year

All taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.

Additional IRS Resources:

If you have any additional questions regarding this or other income tax matters, please feel free to give me a call at 240-356-5050.

Written by

James Fleming is an accountant and Certified Tax Coach with over 30 years experience working in and with small businesses. His company, Fleming Financial Solutions offers tax planning and preparation, bookkeeping, business plan writing and marketing consulting.

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