In a one word answer, yes Social Security, disability and retirement, benefits are taxable IF your income is over a certain amount.
Some people have to pay federal income taxes on their Social Security benefits, but this usually only happens if there is some other form of substantial income, such as wages, self-employment income, interest, dividends or other taxable income that should be reported on your tax returns.
The important thing to remember is that no one pays federal income tax on more than 85 percent of his or her Social Security benefits based on Internal Revenue Service (IRS) rules.
But, if you file a federal tax return as an “individual” and your combined income is between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits. If you file a federal tax return as an “individual” and your combined income is more than $34,000, up to 85 percent of your benefits may be taxed.
When filing a joint return, if you and your spouse have a combined income that is between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits. If you file a joint return, and your spouse have a combined income of more than $44,000, up to 85 percent of your benefits may be taxed.
If you have to pay taxes on your Social Security benefits, you can make quarterly estimated tax payments to the IRS or choose to have federal taxes withheld from you benefits.
For more information about the taxation of Social Security benefits, click here.
