If you’ve recently begun receiving Social Security benefits or plan to apply in the near future, you may be wondering this tax season: are Social Security benefits taxable?
The short answer is: sometimes.
Some people have to pay federal income taxes on their Social Security benefits. This usually happens only if you have other substantial income (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return) in addition to your Social Security benefits.
There is never a case when a person pays tax on more than 85 percent of his or her Social Security benefits, based on Internal Revenue Service (IRS) rules. Now, let’s get down to the numbers.
If you file a federal tax return as an individual and your income is between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits. If your income is more than $34,000, then up to 85 percent of your benefits may be taxable.