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Do I Have to Pay Taxes on Social Security Benefits?

Taxpayers who receive Social Security benefits may be required to pay federal income tax depending on their income and filing status. Those with other income, such as wages from a part-time job, interest, dividends, or other retirement income may have to pay tax on up to 85 percent of their Social Security benefits. Most taxpayers whose only source of income is Social Security, however, will typically not pay taxes on their benefits. As always, it’s helpful to consult with a tax professional to get a better understanding of your tax liabilities, but this brief overview is a good place to start.

Calculating Your Social Security Income Taxes

At the beginning of each year, you will receive a Social Security Benefit Statement (Form SSA-1099) which includes the amount you received from the previous year. A quick way to determine if you’ll owe federal income taxes is to take 50% of your Social Security benefits and add it to your adjusted gross income (AGI) and any non-taxable interest income. The total of these amounts is known as your combined income. If your combined income is below a certain threshold, you will not owe any tax.

For single, head of household, widow(er), and those who are married filing separately, the maximum combine income limit is $25,000. The limit is $32,000 if you are married filing jointly. If your combined income exceeds the limits for your filing status, however, you may be required to pay taxes on 50% to 85% of any income above those thresholds.

Fifty percent of your Social Security benefits may be taxable if you are:

  • Filing single, head of household, or qualifying widow(er) with $25,000 to $34,000 income
  • Married filing separately and lived apart from your spouse for the entire tax year with $25,000 to $34,000 income
  • Married filing jointly with $32,000 to $44,000 income

Up to 85% of your benefits may be taxable if you are:

  • Filing single, head of household or qualifying widow(er) with more than $34,000 income
  • Married filing jointly with more than $44,000 income
  • Married filing separately and lived apart from your spouse for the entire tax year with more than $34,000 income
  • Married filing separately and lived with your spouse at any time during the tax year

If the mathematics seem a bit much for you to handle, the IRS does provide a free tool to help you determine what, if any, federal taxes you may owe on your Social Security benefits.

Do I Have to Pay State Taxes On Social Security Income?

Depending on where you live, you may or may not have to pay taxes on your benefits. Currently, only 13 states collect taxes on Social Security income. Four states (Vermont, Minnesota, North Dakota, and West Virginia) follow IRS taxation rules. If you live in any of the following states, your Social Security is partially taxed:

  • Colorado
  • Connecticut
  • Kansas
  • Missouri
  • Montana
  • Nebraska
  • New Mexico
  • Rhode Island
  • Utah

The remaining 37 states do not tax Social Security benefits.

Are Other Social Security Benefits Taxable?

The majority of the other Social Security benefits, such as spousal and disability benefits, are taxable. If you receive survivor benefits on behalf of your child, it is taxable to the child and not you. Although, most children do not earn enough income in a year to owe any taxes. Supplemental Security Income (SSI), however, is non-taxable.

Paying Social Security Taxes

The Social Security Administration estimates that 56% of recipients owe taxes on their benefits. If you are one of these people, you have two options for paying your Social Security taxes.

  • Option 1 – Fill Out Form W-4V, Voluntary Withholding Request. You can select to withhold 7%, 10%, 12%, or 22% from your monthly Social Security benefit check. Once you complete the form, simply drop it off in person at the Social Security Administration (SSA) office or mail it to the closest location.
  • Option 2 – Make Estimated Payments. This is a bit more complicated since you’ll need to determine how much you’ll owe in taxes and send in payments to the IRS each quarter.

As you can imagine, most people go with Option 1, but you can change at any time.

Need Help?

If all of this seems a bit overwhelming, don’t get too stressed out. You can call the IRS at 1-800-829-3676 or check our Publication 554, Tax Guide for Seniors. You can also contact Tax Defense Network at 855-476-6920 for tax preparation assistance.