When it comes to tax season with its barrage of mind-boggling forms and detailed calculations, getting your personal finances in order can feel like a herculean task, especially if you’re not quite sure of the rules.
If you receive Social Security benefits from the government, for example, that money is subject to taxes. The amount you have to pay varies based on income and whether you are filing a joint or individual return.
To walk you through the process, here’s a guide to the formula used by the IRS to determine just how much you’ll owe on your benefits.
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Is Social Security taxable?
Yes. The rules of the Internal Revenue Service dictate that many who receive Social Security benefits will have to pay an income tax on that money.
The amount you pay is determined by a calculation that involves what the IRS dubs “combined income.”
Combined income is: Your adjusted gross income + Nontaxable interest + ½ of your Social Security benefits.
Up to 85% of your Social Security benefits are taxable if:
You file a federal tax return as an “individual” and your combined income is more than $34,000.
You file a joint return, and you and your spouse have a combined income of more than $44,000.
Up to 50% of your Social Security benefits are taxable if:
You file a federal tax return as an “individual” and your combined income is between $25,000 and $34,000.
You file a joint return, and you and your spouse have a combined income between $32,000 and $44,000.
1099, W-4, W-2, W-9, 1040: What are these forms used for when filing your taxes?
How can I get my SSA-1099?
To help you figure out how much you received in benefits over the course of the year, the Social Security Administration should send you a form in January.
This is your Social Security Benefit Statement, or SSA-1099, and can be used to figure out how much you owe when you are filing your federal tax return.
For all those who receive benefits, the SSA-1099 should be mailed to you automatically. If you do not receive it, a printable version should be available online after you create a “my Social Security” account.
Are you ready to file your taxes? Here’s everything you need to know to file taxes in 2023.
This article originally appeared on USA TODAY: Is social security taxable? Find out how the 2023 rates are calculated
Source: https://finance.yahoo.com/news/social-security-income-taxable-irs-130101529.html