Advertisement
retirement

Retiree Tax Tip: Tally Taxes on Social Security

Up to 85% of your Social Security benefits may be taxable depending on your income in retirement.

As you start to figure out your tax burden for 2018, don’t forget that Uncle Sam wants a piece of your Social Security benefits. And it’s hard to avoid the tax because the income thresholds are low and not adjusted for inflation.

To determine how much of your benefits will be taxable, tally your adjusted gross income plus nontaxable interest and half of your Social Security benefits. That figure is your combined income.

Advertisement - Article continues below

If you are an individual filer and your combined income is between $25,000 and $34,000, you may owe tax on up to 50% of your benefits. If your combined income is more than $34,000, up to 85% of benefits may be taxable.

Married couples who file jointly have slightly higher income thresholds. If you and your spouse have a combined income between $32,000 and $44,000, you may owe tax on up to half of your benefits. If combined income is more than $44,000, up to 85% of benefits may be taxable. Read more about figuring the tax in Publication 915 at IRS.gov.

If you expect to owe Uncle Sam tax on your benefits, you can choose to have federal taxes withheld from Social Security by filing Form W-4V. You may also owe state tax if you live in one of the 13 states that currently tax Social Security benefits.

Advertisement

Most Popular

HSAs Get Even Better
Financial Planning

HSAs Get Even Better

Workers have more options with flexible spending accounts, too.
July 2, 2020
2020 Stock Market Holidays and Bond Market Holidays
Markets

2020 Stock Market Holidays and Bond Market Holidays

Is the market open today? Take a look at which holidays the stock markets and bond markets take off in 2020.
July 1, 2020
Find a Great Place to Retire
happy retirement

Find a Great Place to Retire

Our cities provide plenty of space to spread out without skimping on health care or other amenities.
July 2, 2020

Recommended

14 Social Security Tasks You Can Do Online
retirement

14 Social Security Tasks You Can Do Online

Why visit a government office to get your Social Security business done? You can do much of that online.
June 26, 2020
20 IRS Audit Red Flags
tax returns

20 IRS Audit Red Flags

There's no sure way to avoid an IRS audit, but these red flags could increase your chances of drawing unwanted attention from the IRS.
July 1, 2020
10 IRS Audit Red Flags for Retirees
retirement

10 IRS Audit Red Flags for Retirees

Watch out: These things can increase the chances that the IRS will give your tax return a closer look.
July 1, 2020
Is There an Unclaimed Tax Refund Waiting for You?
tax refunds

Is There an Unclaimed Tax Refund Waiting for You?

The IRS has $1.5 billion in refunds from 2016 waiting to be claimed. Is any of that money yours?
July 1, 2020