With the tax due date around the corner, there is a lot for individuals to remain aware of. In fact, seniors often forget that up to 85 percent of their Social Security benefits may be taxed.
According to The Motley Fool, the average amount of taxes retirees owed is $3,211. That is a significant sum; this money could help individuals pay for much-needed healthcare, food, and even home payments.
Determine if Your Benefits will be Taxed
Retirees should first determine their provisional income. Provisional income is the adjusted gross income plus any additional tax-exempt income that will be reported on federal taxes. This income can include any pensions, wages, interest, dividends, and capital gains.
Next, retirees need to figure out their filing income. For those filing individually, the calculations go as follows:
- Halve any Social Security income and add that to any other income.
- For those whose calculations come anywhere between $25,000 and $34,000, you may see up to 50 percent of your Social Security income taxed.
- Anyone whose income is above this range, expect up to 85 percent of your Social Security benefits to be taxed.
For those filing jointly, find out if you will owe taxes by:
- Halving both Social Security incomes and add the totals together.
- Any combined sum that is between $32,000 and $44,000 may see up to 50 percent of your Social Security benefits taxed.
- For anyone who’s sum is above $44,000 can see up to 85 percent of their Social Security benefits taxed.
State Taxes
In addition to any federal taxes due, there may also be state taxes for retirees to consider. There are 13 states that will tax Social Security benefits; Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, North Dakota, Vermont, West Virginia, and Utah.
Retirees Deserve More
Many retirees rely on their entire income each month. This means any subtraction from this income, including taxes, can be devastating.
After years of working, senior citizens deserve to feel financial stability throughout retirement. That is why we’re taking a stand and demanding Social Security taxes stop. Learn more about our work by visiting our website here.
