Are Social Security Benefits Taxable?

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While it may be difficult to stomach, the fact is that social security benefits may be taxable. Generally, if your only income is from social security, your benefits are probably not taxable and you may not need to file a tax return. If you have sources of income in addition to social security, however, then you may have to pay taxes on your benefits. Additional sources of income would include wages, self employment income, interest and dividends, or pension income. Fortunately, the IRS has provided some guidance to determine whether or not your social security benefits are taxable.

If you receive Social Security you should automatically receive a Form SSA-1099 each January. This form shows you the total amount of benefits you received for the prior year, and you will need this form when you file your taxes. The IRS provides a list of 7 factors to help you determine if your benefits are taxable or not. Here’s the list which you can access from the IRS site:

  1. How much – if any – of your Social Security benefits are taxable depends on your total income and marital status.
  2. Generally, if Social Security benefits were your only income for 2010, your benefits are not taxable and you probably do not need to file a federal income tax return.
  3. If you received income from other sources, your benefits will not be taxed unless your modified adjusted gross income is more than the base amount for your filing status.
  4. Your taxable benefits and modified adjusted gross income are figured on a worksheet in the Form 1040A or Form 1040 Instruction booklet.
  5. You can do the following quick computation to determine whether some of your benefits may be taxable: First, add one-half of the total Social Security benefits you received to all your other income, including any tax exempt interest and other exclusions from income. Then, compare this total to the base amount for your filing status. If the total is more than your base amount, some of your benefits may be taxable.
  6. The 2010 base amounts are:
    • $32,000 for married couples filing jointly,
    • $25,000 for single, head of household, qualifying widow/widower with a dependent child, or married individuals filing separately who did not live with their spouses at any time during the year, or
    • $0 for married persons filing separately who lived together during the year.
  7. For additional information on the taxability of Social Security benefits, see IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits. Publication 915 is available on this website or by calling 800-TAX-FORM (800-829-3676).

If you find out you do have to pay taxes on your Social Security benefits, you have the option to have Social Security withhold federal taxes when you apply for your benefits. You are not required to do this, but you may find it easier than making quarterly payments. If you are already receiving benefits and you want them to start withholding taxes, you can complete Form W-4V from the Internal Revenue Service. This form can also be used to stop or change the withholding. Here’s how you get the form:

  • You can download the form
  • Call the IRS toll-free number 1-800-829-3676 and ask for Form W-4V, Voluntary Withholding Request. (If you are deaf or hard of hearing, call the IRS TTY number, 1-800-829-4059.)

When you complete the form, you will be required to select the amount you want withheld. You will be give the following options: 7%, 10%, 15% or 25%. You can only choose from those percentages and you will not be able to choose a flat dollar amount.

Published or Updated: February 16, 2013
About Rob Berger

Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

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