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Your Social Security Benefits May Be Taxable


May 13, 2010

There are several types of government benefits that may be subject to taxation: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). Social Security Income goes to retirees and/or surviving spouses; SSDI provides income for the disabled while SSI is designed  to provide additional income for the disabled or elderly who demonstrate financial need. While SSI is not taxable, Social Security Income and SSDI may be taxable depending on the circumstances. 

Note:  Payments by the Railroad Retirement Board to retirees are treated substantially the same for IRS purposes as regular social security income.  

More often than not, Social Security Income Benefits will not surpass the threshold that requires taxes be withheld. However, it will depend on both your filing status and your total income to ascertain for sure, what if anything is taxable. How much - if any- of your Social Security benefits are taxable depends on your total income and marital status.  

Generally, if Social Security benefits were your only income they are not taxable and you probably do not need to file a federal income tax return.  

However, if you earn or receive income from other sources you can make a few calculations to determine if you owe and if you will be required to file.

  1. Add one-half of the total Social Security you receive to all your other income, including any tax exempt interest and other exclusions from income.
  2. Compare the total to the thresholds for your filing status, as listed below. If the total is more than your threshold, some of your benefits may be taxable. 

The thresholds and percentages are:

  • If you are married and filing a joint return, you may have to pay taxes on 50% of your benefits, if your combined income is between $32,000 and $44,000.

    If your combined income is more than $44,000, up to 85% your Social Security benefits are subject to income tax.
  • 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 income tax on 50% of your Social Security benefits.
  • If your combined income is above $34,000, up to 85% your Social Security benefits are subject to income tax.
  • If you are married and file separate tax returns, you will likely need to pay taxes on a portion of your benefits regardless of how much you and your spouse earned. 

If in doubt about how much you may owe or if you even need to file an income tax return, consult your tax professional or for more details about Social Security Benefits and their tax implications see IRS Publication 915.