What About Social Security Income?
Social Security benefits are classified as unearned income and may be taxable depending on the taxpayer’s overall income and filing status. However, Supplemental Security Income (SSI) payments, which are provided to low-income individuals, are not subject to federal income tax.
Taxpayers receiving Social Security benefits, which include monthly retirement, survivor, and disability benefits, may be required to pay federal income tax on a portion of these benefits. The amount of Social Security benefits that is taxable depends on the taxpayer’s combined income. To determine the taxable portion, taxpayers should first calculate their combined income, which includes half of their Social Security benefits plus their other sources of income. For married taxpayers filing jointly, the calculation involves taking half of both the taxpayer’s and their spouse’s Social Security benefits and adding this to their combined income.
Fifty percent of a taxpayer’s Social Security benefits may be taxable under certain conditions. Specifically, if the taxpayer is filing as single, head of household, or qualified surviving spouse (used to be qualifying widow) and their income falls between $25,000 and $34,000, then up to 50% of their benefits may be subject to tax. Similarly, if a taxpayer is married filing separately and lived apart from their spouse for the entire year, with an income in the $25,000 to $34,000 range, they are also subject to the same rule. For those married and filing jointly, if their combined income falls between $32,000 and $44,000, up to 50% of their Social Security benefits may be taxable.
Ejemplo:
Linda, a 67-year-old retiree living in Portland, Oregon, receives Social Security benefits. Her filing status is single, and she has other sources of income from a part-time job and some investment returns. Linda’s total income for the year is $28,000, which includes her Social Security benefits.
Filing Status:
Income Range:
Taxable Social Security Benefits:
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