Some people have to pay federal income taxes on the Social Security benefit they receive. Typically, this occurs only when individuals receive benefits and have other substantial sources of income from wages, self-employment, interest, dividends and/or other taxable earnings that must be reported on your tax return.

In accordance with Internal Revenue Service (IRS) rules, you won't pay federal income tax on more than 85% of your Social Security benefits. The percentage of benefits for which you will owe income tax is dependent upon your filing status and combined income. If you:

  • File a federal tax return as an "individual" and your combined income is
    • Between $25,000 and $34,000, you may have to pay income tax on up to 50% of your benefits
    • More than $34,000, up to 85% of your benefits may be taxable.
  • File a joint return, and you and your spouse have a combined income that is
  • Between $32,000 and $44,000, you may have to pay income tax on up to 50% of your benefits
  • More than $44,000, up to 85% of your benefits may be taxable.
  • Are married and file a separate tax return, you will probably owe taxes on your benefits.

Note: the IRS defines combined income as your adjusted gross income, plus nontaxable interest, plus of your Social Security benefits. You will receive a Social Security Benefit Statement (From SSA-1099) each January detailing the amount of benefits you received during the previous tax year. You can use this when you complete your federal income tax return to determine if you owe income tax on your benefits. If you do owe taxes on your Social Security benefits, you can make quarterly estimated tax payments to the IRS or choose to have federal taxes withheld from your benefits.

  1. Are Social Security survivor benefits for children considered taxable income?

    Social Security survivor benefits for children are considered taxable income only for the children who are entitled to receive ... Read Full Answer >>
  2. At what age will I be eligible for the maximum Social Security payout?

    On August 14, 1935, U.S. President Roosevelt signed into law the Social Security Act, a social insurance program designed ... Read Full Answer >>
  3. Why is Social Security running out of money?

    On August 14, 1935, U.S. President Roosevelt signed into law the Social Security Act. Originally implemented to assist older ... Read Full Answer >>
  4. Can my spouse and children collect my Social Security when I die?

    Social Security pays four different types of benefits: retirement, disability, family and survivor. Under survivor benefits, ... Read Full Answer >>
  5. Why is the Cayman Islands considered a tax haven?

    The Cayman Islands is one of the most well-known tax havens in the world. Unlike most countries, the Cayman Islands does ... Read Full Answer >>
  6. What are the main kinds of annuities?

    There are two broad categories of annuity: fixed and variable. These categories refer to the manner in which the investment ... Read Full Answer >>
Related Articles
  1. Retirement

    What If Social Security Disability Runs Out Of Money?

    The social security disability program is nearly bankrupt and could run out of money by 2016.
  2. Economics

    Explaining Corporate Tax

    A corporate tax is a tax levied on the profits a corporation generates.
  3. Taxes

    The 5 Countries Without Income Taxes

    Discover information on some of the best countries to consider relocating to that offer the financial benefit of charging no income tax.
  4. Professionals

    Is Delaying Social Security Until 70 a Good Idea?

    Soon to be retirees are often told it's best to wait until age 70 to collect Social Security. Here's why this is not always the best advice.
  5. Professionals

    Top Tips for Maximizing Social Security

    Between delaying filing, claiming strategies and taking advantage of special marital benefits, there are several ways to maximize Social Security.
  6. Options & Futures

    Pick 401(k) Assets Like A Pro

    Professionals choose the options available to you in your plan, making your decisions easier.
  7. Investing Basics

    5 Things To Ask Before Hiring A Financial Advisor

    Choosing a financial advisor isn't an easy task. Here's a list of the most important things to consider when planning for your financial future.
  8. Retirement

    5 Reasons Why Americans Retire in Malaysia

    Understand why Americans are deciding to retire internationally. Learn about the top five reasons why Americans are retiring to Malaysia.
  9. Retirement

    How Much Can You Contribute to Your 401(k)?

    Given the fairly high compensation limits on these retirement plans, most workers can pitch in more than they currently do.
  10. Taxes

    Tax Haven Vs. Tax Shelters: Is There a Difference?

    Learn about the difference between tax havens and tax shelters, and how both are used to reduce tax liability or avoid paying taxes altogether.
  1. Social Security Act

    A law enacted by President Franklin D. Roosevelt in 1935 to create ...
  2. Section 1231 Property

    A tax term relating to depreciable business property that has ...
  3. Dynamic Updating

    A method of determining how much to withdraw from retirement ...
  4. Possibility Of Failure (POF) Rates

    The likelihood that a retiree will run out of money prematurely ...
  5. Safe Withdrawal Rate (SWR) Method

    A method to determine how much retirees can withdraw from their ...
  6. Mandatory Distribution

    The amount an individual must withdraw from certain types of ...

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!