Newspaper article Charleston Gazette Mail

SAVVY SENIOR ; Paying Income Tax on SS Benefits

Newspaper article Charleston Gazette Mail

SAVVY SENIOR ; Paying Income Tax on SS Benefits

Article excerpt

Dear Savvy Senior,

Will I have to pay federal income taxes on my Social Security benefits when I retire? - Approaching Retirement

Dear Approaching,

Whether or not you'll be required to pay federal income tax on your Social Security benefits will depend on your income and filing status. About 35 percent of Social Security recipients have total incomes high enough to trigger federal income tax on their benefits.

To figure out if your benefits will be taxable, you'll need to add up all of your "provisional income, which includes wages, taxable and non-taxable interest, dividends, pensions and taxable retirement-plan distributions, self-employment, and other taxable income, plus half your annual Social Security benefits, minus certain deductions used in figuring your adjusted gross income.

How To calculate

To help you with the calculations, get a copy of IRS Publication 915 "Social Security and Equivalent Railroad Retirement Benefits, which provides detailed instructions and worksheets. You can download it at irs.gov/pub/irs-pdf/p915.pdf or call the IRS at 800- 829-3676 and ask them to mail you a free copy.

After you do the calculations, the IRS says that if you're single and your total income from all of the listed sources is:

* Less that $25,000, your Social Security will not be subject to federal income tax.

* Between $25,000 and $34,000, up to 50 percent of your Social Security benefits will be taxed at your regular income-tax rate.

* More than $34,000, up to 85 percent of your benefits will be taxed.

If you're married and filing jointly and the total from all sources is:

* Less that $32,000, your Social Security won't be taxed.

* Between $32,000 and $44,000, up to 50 percent of your Social Security benefits will be taxed.

* More than $44,000, up to 85 percent of your benefits will be taxed.

If you're married and file a separate return, you probably will pay taxes on your benefits. …

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