This is a common question with a somewhat confusing answer …. (maybe).
You should receive a Form SSA1099 which will show the total amount of your benefits. Generally, if Social Security benefits were your only income, your benefits are not taxable and you probably do not need to file a federal income tax return.
If you have other sources of income, up to 85% of your social security income could become taxable. Below is a guideline to help determine whether you may be paying tax on your benefits
- First add one half of your social security benefits to all of your other income, including your tax exempt interest and other excluded income. This is your modified adjusted gross income.
- If you are single and your modified adjusted gross income exceeds $25,000 (base amount) your benefits will be taxable.
- If you are married filing a joint return and your modified adjusted gross income exceeds $32,000 your benefits will be taxable.
- If you are married filing a separate return and did not live with your spouse at all during the year you each use the $25,000 base amount.
- If you are married filing separate and did live with your spouse during part of the year the base amount is “0” and your benefits are taxable.
Now, if you are still confused, you can feel free to give me a call.
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).