Like most other income that Americans earn, Social Security income has to be reported to the IRS. As the agency states, “the net amount of Social Security benefits that you receive from the Social Security Administration (SSA) is reported in Box 5 of Form SSA-1099, Social Security Benefit Statement, and you report that amount on line 5a of your Form 1040 (or 1040-SR for Seniors)”.
How is Social Security Taxed?
Your specific tax liability for your Social Security benefits depends on the total income you are reporting for the given tax year. The IRS says that your benefits may be taxable if the total is “(1) one-half of your benefits, plus (2) all of your other income, including tax-exempt interest, is greater than the base amount for your filing status”. These are the base amounts for your filing status:
- $25,000 if you’re single, head of household, or qualifying widow(er),
- $25,000 if you’re married filing separately and lived apart from your spouse for the entire year,
- $32,000 if you’re married filing jointly,
- $0 if you’re married filing separately and lived with your spouse at any time during the tax year.
In short, if you meet at least one of these income thresholds for total income, then you’ll have to pay tax on one-half of your Social Security benefits. It is also worth mentioning that SSI benefits are not taxable.
What If Social Security is my sole income?
If a beneficiary has only Social Security benefits as his/her income, then a tax return is not needed as those benefits are not taxed. For low-income earners, there are several scenarios where tax liability may or may not come into play.
No matter your situation, you should work to get all of the Social Security disability benefits that you’ve earned or are open to you. If you’ve been denied or are having other issues, it’s wise to consult a qualified Social Security claims attorney to see which additional options are open to you. Call the team at Drew L. Johnson, P.C. today at (541) 434-6466 to learn more and schedule a free consultation.