Which Social Security Benefits Are Tax Exempt?


Exempt Social Security Benefits

 

The two factors that matter most in determining whether your Social Security benefits are taxable are your income and your filing status. Generally speaking, that means that the more income you have, the more likely you are to see some of it taxed, even if part of your income originates from Social Security.

These are federal laws that apply to people living in every state in the nation, regardless of various income tax laws at the state level.

 

4 Questions to Help You Discover More

Ask these four questions to start researching the issue of possible taxes you owe on Social Security benefits.

1. Did you receive these benefits during or before 2013? If so, different tax laws apply and you will need to research this further. For those who received Social Security benefits as their only form of income in 2013, it’s probable that your benefits for this period are not taxable.

2. Do you have multiple sources of income? If so, it is likely that your Social Security benefits are taxable.

3. Did you file an electronic return last year? If you want to e-file and made $64,000 or less, you can e-file using Free File on the IRS site. The software will calculate taxes you might owe on Social Security benefits for you. If you made more than $64,000, consult a tax expert or use Free File Fillable Forms at the same site. If you want to file using paper forms, you can use the Interactive Tax Assistant tool.

4. What was your total income for the past, including half of your Social Security benefits and tax-exempt interest payments? Your benefits are taxable to some degree if your income exceeds the following base rates:

  • $0 – This applies to those who filed as married persons filing separately who lived together at any time during the year.
  • $25,000 – This applies to those who filed as single, HoH (head of household), qualifying widow or widower with a dependent child. It also sets the base for those who are married filing separately and did not live with their spouse at any time during the year.
  • $32,000 – This applies to those who filed jointly as married couples.

 

The New Approach to Social Security

Remember that this is a complex calculation and many changes to Social Security benefits are planned for 2017 and the years ahead. Make certain that your tax expert has the most updated information on changes and has plans for what to do based on the most likely changes on the horizon.


 

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