Many beneficiaries don’t realize their Social Security benefits could be taxed as income. Luckily, not all of an individual’s benefits will be subjected to this tax. The percentage of benefits taxed, however, relies on a few additional factors.
How It Works
According to Christy Bieber from the Motley Fool, via USA Today, Social Security benefits start being taxed once an individual’s combined income reaches a certain threshold.
The article explains that, unfortunately, even as COLA increases benefit payments each year, the buying power of the average benefit payment is not what it used to be. Additionally, the article explains that the threshold does not change each year with the COLA changes.
Because this threshold remains steady, more and more Americans are subjected to this tax.
Calculating A Combined Income
The fastest way to determine whether an individual’s Social Security benefits are taxable is to do some quick math to determine their combined income. First, take half of their benefit payments. Next, add this amount to any other income they received—including any tax-exempt interest.
This total is the number individuals will need to compare to the limits to determine whether or not their benefits are taxable.
So What Are The Limits?
According to The Motley Fool, the limit varies depending on how an individual files their taxes. For those who file as single, the limit is $25,000; for any married joint filers, the limit is a bit more at $32,000. With an income above this limit, individuals can have up to 50% of their benefits taxed as income.
However, there is another limit to consider.
If the income exceeds $34,000 for single filers or $44,000 for married joint filers, up to 85% of their Social Security benefits are subject to being taxed as income.
We’re Working To Help
If taxing Social Security benefits as income causes you to feel uneasy, rest assured, you’re not alone. We feel the same way. Senior citizens earned their benefit payments through years of hard work.
Help us to eliminate this tax by urging politicians in Washington to pass our groundbreaking bill. This bill would no longer allow Social Security benefits to be taxed as income.
