Navigating tax season can be daunting with its multitude of forms and intricate calculations.
Understanding the taxation of Social Security benefits adds another layer of complexity.
The Internal Revenue Service (IRS) mandates that individuals receiving Social Security benefits must pay income tax on that money.
The tax amount is determined through a formula involving "combined income,"
calculated as your adjusted gross income plus nontaxable interest plus half of your Social Security benefits.
If filing as an individual with a combined income exceeding $34,000 or filing jointly with a combined income exceeding $44,000, up to 85% of your Social Security benefits are taxable.
For those with an individual combined income between $25,000 and $34,000, or joint combined income between $32,000 and $44,000, up to 50% is taxable.
Your Social Security Benefit Statement (SSA-1099) is crucial for calculating owed taxes.
It is automatically mailed, but if not received, a printable version is accessible online via a "my Social Security" account.
This concise guide aims to simplify the intricate tax implications surrounding Social Security benefits during the tax season.