As plagarised from Social Security Website. Social Security Benefits are generally not taxable. Social security considers tax free income as income never-the-less and will cause up to 85% of social security to become taxable.
Your benefits generally are not taxable if half of your benefits, plus all your other income, is less than $25,000 if you are single ($32,000 if you are married filing jointly). If half of your benefits, plus all of your other income, is more than $34,000 (for singles) or $44,000 (married filing jointly), then 85% of your benefits are subject to income tax. If you fall somewhere between the lower and upper limits, then the percentage of your taxable benefits varies between 0% and 85%.
Your benefits may be taxable
About one-third of people who get Social Security have to
pay income taxes on their benefits. For example:
• If you file a federal tax return as an “individual,” and
your combined income* is between $25,000 and $34,000,
you may have to pay taxes on up to 50 percent of your
Social Security benefits. If your combined income*
is more than $34,000, up to 85 percent of your Social
Security benefits is subject to income tax.
• If you file a joint return, you may have to pay taxes on
50 percent of your benefits if you and your spouse have a
combined income* that is between $32,000 and $44,000.
If your combined income* is more than $44,000, up to
85 percent of your Social Security benefits is subject to
income tax.
• If you’re married and file a separate return, you probably
will pay taxes on your benefits.
At the end of each year, we’ll mail you a Social Security
Benefit Statement (Form SSA-1099) showing the amount
of benefits you received. Use this statement when you
complete your federal income tax return to find out if you
must pay taxes on your benefits.
Although you’re not required to have Social Security
withhold federal taxes, you may find it easier than paying
quarterly estimated tax payments.
For more information, call the Internal Revenue
Service’s toll-free telephone number, 1-800-829-3676,
to ask for Publication 554, Tax Guide for Seniors, and
Publication 915, Social Security And Equivalent Railroad
Retirement Benefits.
