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why do you have to pay taxes on social security

IRS Tax Tip 2017-13, February 13, 2017
If taxpayers receive Social Security benefits, they may have to pay federal income tax on part of those benefits. These IRS tips will help taxpayers determine if they need to do so. Form SSA-1099. В If taxpayers received Social Security benefits in 2016, they should receive a Form SSA-1099, Social Security Benefit Statement, showing the amount of their benefits. Only Social Security. В If Social Security was a taxpayerвs only income in 2016, their benefits may not be taxable. They also may not need to file a federal income tax return. If they get income from other sources, they may have to pay taxes on some of their benefits. Free File. В Taxpayers may use to prepare and e-file their tax returns for free. If they earned $64,000 or less, they can use brand-name software. The software does the math for them, which helps avoid mistakes. If taxpayers earned more, they can use Free File Fillable Forms. This option uses electronic versions of IRS paper forms.

Itвs best for people who are used to doing their own taxes. Free File is available only by going to. Interactive Tax Tools. В Taxpayers can get answers to their tax questions with this helpful tool, to see if any of their benefits are taxable. They can also visit IRS. gov and use the tool. Tax Formula. В Hereвs a quick way to find out if a taxpayer must pay taxes on their Social Security benefits: Add one-half of the Social Security income to all other income, including tax-exempt interest. Then compare that amount to the base amount for their filing status. If the total is more than the base amount, some of their benefits may be taxable. Base Amounts. $25,000 в if taxpayers В are single, head of household, qualifying widow or widower with a dependent child or married filing separately and lived apart from their spouse for all of 2016 $32,000 в if they are married filing jointly All taxpayers should keep a copy of their tax return.

Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at. , Social Security and Equivalent Railroad Retirement Benefits Is Social Security Taxable? - It used to be so simple: Social Security benefits were tax-free. Period. But then, as part of a "Save Social Security" plan, Congress decided to tax up to 50% of benefits. Later, lawmakers decided to tax up to 85%, with the extra revenue going to shore up Medicare. See Also: So, who gets taxed and who doesnБt? First the good news: About 70% of all beneficiaries are still safe. YouБre among the 18 million or so who arenБt so lucky, though, if your Бprovisional incomeБ is more than $25,000 on a single return or $32,000 on a joint return.

Provisional income is adjusted gross income (not including Social Security) plus 50% of your benefits plus any tax-free interest from municipal bonds. If that income is between $25,000 and $34,00 on a single return or between $32,000 and $44,000 on a joint return, up to 50% of your benefits can be taxed. The rest is tax-free. Now, if your provisional income is more than $34,000 on a single return or $44,000 on a joint return, itБs likely that 85% of your benefits will be taxed. If you use tax software, it will automatically determine the correct amount. Otherwise, use the IRSБs 18-line worksheet to pinpoint exactly how much is taxed and how much is tax-free. Finally, donБt assume that your state taxes the same amount of benefits as Uncle Sam. In most states, Social Security is still completely tax-free. Take a look at our to learn more about how you will be taxed during retirement based on where you live. See Also:

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