Income and Investments Are Social Security Benefits Taxable? Read the Article Open Share Drawer Share this:Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Pinterest (Opens in new window)Click to print (Opens in new window) Written by Elle Martinez Published Aug 14, 2017 - [Updated Nov 17, 2020] 1 min read When you’re planning your retirement, you have look at all of your income streams during retirement and the living expenses you’ll be expecting. You should also be checking on the taxes you’re expected to pay, specifically taxes on your Social Security income. Not everyone has to pay taxes on their Social Security benefits. To see if your Social Security will be taxed, you have to look at your combined income and your marital status. “Combined income” in relation to social security income is Adjusted Gross Income plus nontaxable interest plus 1/2 of social security benefits. If you’re single and your total combined income for the year is between $25,000 and $34,000, then up to 50% of your benefits can be taxed. If you’re single and your total combined income for the year is greater than $34,000, then up to 85% of your benefits can be taxed. If you’re married filing jointly and your total combined income for the year is between $32,000 and $44,000, then up to 50% of your benefits can be taxed. If you’re married filing jointly and your total combined income for the year is greater than $44,000, then up to 85% of your benefits can be taxed. SSA-1099: You’ll Need It If you’re already receiving Social Security benefits, you can use your SSA-1099 form (Social Security Benefit Statement) to determine how much of your benefits are taxable. You should receive it in January and should have the information required for the previous year. When you file taxes, you’ll need this form, so keep it in a safe place! But don’t worry about figuring how much of your social security income is taxable. TurboTax asks you simple questions and makes the behind the scenes calculations to figure out if your social security income is taxable based on your income entries. Previous Post 7 Ways to Save When Your Family Goes to the… Next Post What is a Qualified Joint Venture? Written by Elle Martinez Elle helps families at Couple Money achieve financial freedom by sharing tips for reducing debt, increase income, and building net worth. Learn how to live on one income and have fun with the second. More from Elle Martinez Visit the website of Elle Martinez. Follow Elle Martinez on Facebook. Follow Elle Martinez on Twitter. 72 responses to “Are Social Security Benefits Taxable?” « Older Comments Well, I went back in and TurboTax had correctly calculated and correctly entered my taxable amount of Social Security benefits in line 5b on my 1040. I had commented earlier that it was not doing it correctly, but after I reviewed the worksheet form it was fixed. Reply TurboTax Deluxe 2018 does NOT compute the Social Security taxable amount (line 5b on the 1040) correctly. It assumes that the total amount in block 5 (your total Social Security Benefits) from your SSA-1099 is taxed and enters that in block 5b. Not true. I used the IRS Worksheet 1 for the 1040 and mine was only 85% of the amount in block 5a. Sadly, there is no way in TurboTax to simply enter the correct amount in block 5b on the 1040 as best I can determine. Reply The original article says not to worry, that turbo tax does the calculations behind the scenes, but why then is the full amount of SSDI entered the same as what you see actually listed in the income section? Anything else requiring calculations is more visible, i.e., mileage calculations, etc. Shouldn’t there be a pop-up showing the 85% or 50% (whichever the case may be), and then the figure calculated as taxable income put on that line for one to see? Reply Please notify me when u answer don’t know how I found this site Reply I am on SSDI and I make 22,100/yr and I will be receiving an insurance award from my Mom’s 401 this year. My Mom passed away this January. Should the monies from a 401 be added as adjusted income for tax purpose? I have been receiving SSDI for 6years and never had to pay taxes on my income. I am 45 and single, no kids, no mortage! 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Well, I went back in and TurboTax had correctly calculated and correctly entered my taxable amount of Social Security benefits in line 5b on my 1040. I had commented earlier that it was not doing it correctly, but after I reviewed the worksheet form it was fixed. Reply
TurboTax Deluxe 2018 does NOT compute the Social Security taxable amount (line 5b on the 1040) correctly. It assumes that the total amount in block 5 (your total Social Security Benefits) from your SSA-1099 is taxed and enters that in block 5b. Not true. I used the IRS Worksheet 1 for the 1040 and mine was only 85% of the amount in block 5a. Sadly, there is no way in TurboTax to simply enter the correct amount in block 5b on the 1040 as best I can determine. Reply
The original article says not to worry, that turbo tax does the calculations behind the scenes, but why then is the full amount of SSDI entered the same as what you see actually listed in the income section? Anything else requiring calculations is more visible, i.e., mileage calculations, etc. Shouldn’t there be a pop-up showing the 85% or 50% (whichever the case may be), and then the figure calculated as taxable income put on that line for one to see? Reply
I am on SSDI and I make 22,100/yr and I will be receiving an insurance award from my Mom’s 401 this year. My Mom passed away this January. Should the monies from a 401 be added as adjusted income for tax purpose? I have been receiving SSDI for 6years and never had to pay taxes on my income. I am 45 and single, no kids, no mortage! Reply