January 30, 2014

YOUR SOCIAL SECURITY Davenport, Iowa Office

By Linda Clayton-Powell
Social Security District Manager
Davenport, Iowa

ARE YOUR SOCIAL SECURITY BENEFITS TAXABLE?

If you’ve recently begun receiving Social Security benefits or plan to apply in the near future, you may be wondering this tax season: are Social Security benefits taxable?

The short answer is: sometimes.

Some people have to pay federal income taxes on their Social Security benefits. This usually happens only if you have other substantial income (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return) in addition to your Social Security benefits.

There is never a case when a person pays tax on more than 85 percent of his or her Social Security benefits, based on Internal Revenue Service (IRS) rules. Now, let’s get down to the numbers.

If you file a federal tax return as an individual and your income is between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits. If your income is more than $34,000, then up to 85 percent of your benefits may be taxable.

If you are married and you file a joint return, and you and your spouse have a combined income that is between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits. If your combined income is more than $44,000, then up to 85 percent of your benefits may be taxable.

Note that your “income” for the purpose of determining whether you must pay taxes on some of your Social Security benefits includes your adjusted gross income, your nontaxable interest, and one half of your Social Security benefits.

In January, you should have received a Social Security Benefit Statement showing the amount of benefits you received last year. You can use this statement, or SSA-1099, when completing your federal income tax return to find out whether some of your benefits are subject to federal income tax. If you didn’t receive yours, you can request one at www.socialsecurity.gov/1099.

So, are your Social Security benefits taxable? Maybe. To learn more, read page 14 of our booklet, Retirement Benefits, available at www.socialsecurity.gov/pubs or visit www.irs.gov/ to obtain more detailed information on the subject.

SOCIAL SECURITY VARIETY SAMPLER

February is National Chocolate Lover’s Month. So please accept as our gift to you this variety sampler of Social Security’s sweetest online services.

Forrest Gump’s momma always said life was like a box of chocolates. “You never know what you’re gonna get.” But when it comes to Social Security, you’ll know exactly what to expect after browsing this assortment of convenient, secure, and free online services.

Take this one: an easy way to find how you can get or replace your Social Security card at www.socialsecurity.gov/ssnumber.

Next, the one with two pieces in the same wrapper: our Retirement Estimator. You can use it as many times as you’d like, changing variables such as retirement date options and future earnings, to get instant, personalized estimates of your future benefits at www.socialsecurity.gov/estimator.

The one in the center may be the best one of all: an online application for retirement benefits that you can complete and submit in as little as 15 minutes at www.socialsecurity.gov/planners/about.htm.

Check out the one wrapped in gold foil: a convenient way to apply for disability benefits at www.socialsecurity.gov/applyfordisability.

And the one in the corner: an online application for Medicare that lets you complete an application for Medicare benefits in as little as 10 minutes, at www.socialsecurity.gov/medicareonly.

Another sweet option: Extra Help with Medicare prescription drug costs. You can learn more and apply online at www.socialsecurity.gov/prescriptionhelp.

The sampler is still more than half full, but you may as well enjoy one more: my Social Security is an online account that allows you immediate access to your personal Social Security information. During your working years, once you create your online account, you can use my Social Security to view your Social Security Statement to check your earnings record and see estimates of the future retirement, disability, and survivor benefits you and your family may receive. Check it out at www.socialsecurity.gov/myaccount. Are you already receiving benefits? You can use your online account to immediately get your proof of benefits letter, change your address or phone number on our records, start or change your direct deposit information, and check your benefit and payment information.

It’s always nice when a box of assorted chocolates includes a diagram. That’s why we invite you to visit our convenient publication library with online booklets and pamphlets on numerous subjects, at www.socialsecurity.gov/pubs.

Whether you’re enjoying chocolates because it’s Valentine’s Day or Chocolate Lover’s Month, keep in mind the number one reason why Social Security’s online services are even better than a box of chocolates: you’ll always know exactly what you’re gonna get.

Filed Under: Finance, Retirement