It is important to remember that some people who receive Social Security benefits will have to pay income taxes on them.
At the end of each year, each beneficiary gets a Social Security Benefit Statement (Form SSA-1099) showing the amount of benefits received. This statement can be used when completing the federal income tax return.
Fifty percent of Social Security benefits may be subject to income tax for individuals with a combined income between $25,000 and $34,000, or for couples with a combined income between $32,000 and $44,000.
(Note: “Combined income” means adjusted gross income, plus nontaxable interest, plus one-half of Social Security benefits.)
Up to 85 percent of Social Security benefits may be subject to income tax for individuals with a combined income above $34,000, or for couples with a combined income above $44,000.
For more information on taxation of Social Security benefits, call the IRS’s toll-free telephone number, 1-800-829-3676, to ask for Publication 554, Tax Information for Older Americans.
The publication is also available from the IRS Web site, www.irs.ustreas.gov.