Were you surprised when you finished your tax return and discovered that part of your social security benefits were taxed on your return?
Some people must pay taxes on their Social Security benefits. If you get Social Security, you should receive a Form SSA-1099, Social Security Benefit Statement, by early February. The form shows the amount of benefits you received in 2019.
Here are four tips from the IRS to help you determine if your benefits are taxable:
- The amount of your income and your filing status affect whether you must pay taxes on your Social Security.
- If Social Security was your only income in 2019, your benefits are probably not taxable. You also may not need to file a federal income tax return.
- If you received income from other sources, then you may have to pay taxes on your benefits.
- You can follow these two quick steps to see if your benefits are taxable:
- Add one-half of the Social Security benefits you received to all your other income, including tax-exempt interest. Tax-exempt interest includes interest from state and municipal bonds.
- Next, compare this total to the ‘base amount’ for your filing status. If the total is more than your base amount, then some of your benefits may be taxable.
The three 2019 base amounts are:
$25,000 for single, head of household, qualifying widow or widower with a dependent child or married individuals filing separately who did not live with their spouse at any time during the year;
$32,000 for married couples filing jointly; and
$0 for married persons filing separately who lived together at any time during the year.
For more information on the taxability of Social Security benefits, see Tax Topic No. 423 – Social Security and Equivalent Railroad Retirement Benefits.
If you need help, don’t hesitate to contact a Henry+Horne professional adviser.