Whether you owe tax on Social Security depends on your other income

You may owe federal income tax on your Social Security benefits if your total income exceeds a certain threshold. The IRS calls this "combined income," and it includes your wages, interest, dividends, and half of your Social Security benefits added together. If your combined income is below the threshold for your filing status, you owe no tax on your benefits. If it exceeds the threshold, you may owe tax on up to 85 percent of your benefits.

The thresholds have not changed since 1984. For a single filer, the first threshold is $25,000; for married filing jointly, it is $32,000. These amounts do not adjust for inflation, which means more people cross them each year. Some states also tax Social Security benefits, though most do not.

Key Takeaways

  • Combined income — your wages plus half your Social Security benefits — determines whether you owe federal tax on your benefits.
  • If your combined income is under $25,000 (single) or $32,000 (married filing jointly), you owe no federal tax on your benefits.
  • If your combined income exceeds the threshold, you may owe tax on 50 to 85 percent of your benefits, depending on how far over you are.
  • You can ask Social Security to withhold tax from your monthly benefit payment so you do not owe a large amount at tax time.
  • Thirteen states tax Social Security benefits under certain conditions; check your state's rules if you live in one of them.

How the IRS calculates combined income

Combined income is not the same as adjusted gross income (AGI). The IRS adds three things together: your AGI (wages, self-employment income, taxable interest, dividends, and other income), plus nontaxable interest (such as interest from municipal bonds), plus half of your Social Security benefits.

For example, if you received $20,000 in Social Security and earned $15,000 in wages, your combined income would be $15,000 + $10,000 (half your benefits) = $25,000. If you are single, you are exactly at the threshold and owe no tax. If you earned $16,000 instead, your combined income would be $26,000, which is $1,000 over the threshold, and you would owe tax on some of your benefits.

The calculation is the same whether you are retired, disabled, or receiving survivor benefits. It does not matter whether you worked or not — only your current income counts.

The two income thresholds and how much tax you owe

The IRS uses two thresholds to determine how much of your benefits are taxable. The first threshold is $25,000 for single filers and $32,000 for married couples filing jointly. If your combined income is below this, you owe no tax.

If your combined income is between the first and second threshold, you may owe tax on up to 50 percent of your benefits. The second threshold is $34,000 for single filers and $44,000 for married couples filing jointly. If your combined income exceeds the second threshold, you may owe tax on up to 85 percent of your benefits.

The exact amount depends on how far over the threshold you are. The IRS provides a worksheet in the instructions to Form 1040 to calculate this. Most tax software will do the calculation for you if you enter your Social Security income.

Withholding tax from your Social Security payment

You can ask Social Security to withhold federal income tax from your monthly benefit payment. This way, you reduce the amount you owe at tax time or may even receive a refund. You do this by completing Form W-4V (Voluntary Withholding Request) and sending it to your local Social Security office or mailing it to Social Security.

You can choose to have 7, 10, 12, or 22 percent of your benefit withheld each month. If you are unsure which rate to choose, the IRS worksheet for Form 1040 can help you estimate your tax liability. You can change your withholding at any time by submitting a new Form W-4V.

Withholding is optional. If you do not withhold, you are responsible for paying the tax when you file your return. Some people pay estimated tax quarterly instead of withholding from their benefit.

State taxes on Social Security benefits

Thirteen states tax Social Security benefits under certain conditions: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. The rules vary by state — some tax only high-income retirees, and some offer exemptions for people over a certain age.

Colorado, Kansas, and Nebraska are phasing out their taxes on Social Security. If you live in one of these states, check the state revenue department website for the current rules and thresholds. Most states do not tax Social Security at all.

What to do if you think you owe tax on your benefits

If your combined income exceeds the threshold, you will need to report your Social Security income on your federal tax return. You receive a statement called Form SSA-1099 from Social Security by January 31 each year. This form shows the total benefits you received in the previous year.

You report this amount on Schedule 1 (Form 1040) and then use the worksheet in the Form 1040 instructions to calculate how much of your benefits are taxable. If you use tax software or work with a tax preparer, give them the Form SSA-1099 and let them do the calculation.

If you did not withhold tax during the year and expect to owe, you can still file your return and pay what you owe. You can also set up a payment plan with the IRS if you cannot pay in full.

Frequently Asked Questions

What if I have very little income besides Social Security?

If your only income is Social Security and you have no other earnings, interest, or dividends, your combined income is half your benefit amount. Most people with only Social Security income fall below the $25,000 threshold and owe no federal tax. Check your Form SSA-1099 and add half that amount to any other income you received.

Do I have to file a tax return if I only receive Social Security?

Not necessarily. If Social Security is your only income and it is below the filing threshold for your age and status, you do not have to file. However, if you had taxes withheld or think you might be owed a refund, filing can be worth it. The IRS website has a tool to help you determine whether you must file.

Can I reduce my combined income to avoid the tax?

You cannot reduce your Social Security benefits, but you might be able to reduce other income. For example, if you are still working, earning less would lower your combined income. If you have investment income, you could time when you sell investments. Talk to a tax preparer about strategies that fit your situation.

What happens if I did not withhold and now owe a lot of tax?

You can still file your return and pay what you owe. If you cannot pay in full, the IRS allows payment plans. You can also adjust your withholding going forward by submitting a new Form W-4V to Social Security so you do not owe as much next year.