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If you are pursuing Social Security benefits, it is important to note that you may owe federal income taxes in certain cases. This is common for those receiving benefits with large additional income in wages or dividends. Read on or call our firm to learn more about filing income taxes and Social Security benefits.
According to rules set by the IRS, you are required to pay taxes on your Social Security benefits if:
The total amount of your combined income is also considered when determining the percentage to tax on your benefits. When filing a federal tax return as an individual, if your combined income is within the range of $25,000 and $34,000, you could pay up to 50 percent of income tax on your benefits. If the combined income is above $34,000, you may owe up to 85 percent of income tax.
Combined income is also relevant when it comes to filing a joint return. You may owe an income tax of up to 50 percent if your income falls between $32,000 and $44,000. Anything above $44,000 will allow up to 85 percent of your available benefits to be taxed.
A document called the Social Security Benefit Statement or Form SSA-1099 will be mailed to you at the end of the year. The purpose of this document is to inform you of the amount of benefits received. It can be used to help determine if you must pay taxes on your benefits when filling out the federal income tax return.
For more information about filing income taxes and your Social Security Benefits, reach out to our firm today. Planning out years ahead or figuring out how to apply for benefits are tasks that should not be carried out alone. Please contact us to learn how we can assist you.
Jan Dils, Attorneys at Law