Brookville H&R Block Tax Tips: Are Your Social Security Benefits Taxable?
BROOKVILLE, Pa. – H&R Block submitted the following article: "Are Your Social Security Benefits Taxable?"
The taxation of Social Security benefits ultimately depends on your other income. In the worst case scenario, 85% of your benefits would be taxed. (This doesn’t mean you pay 85% of your benefits back to the government in taxes—merely that you would include 85% of them in your income subject to your regular tax rates.)
The figure you will use to determine the tax consequences is what is called your provisional income. Your provisional income is essentially your total income plus half of your social security benefits. This number is derived by taking all your income other than social security benefits, including tax-exempt income items, and adding that to your spouse’s income if you file jointly. Then add half of your social security benefits to that total.
Now you will apply the following rules:
1. If your income plus half your benefits is not above $32,000 ($25,000 for single taxpayers), none of your benefits are taxed.
2. If your income plus half your benefits exceeds $32,000 but is not more than $44,000, you will be taxed on:
- one half of the excess over $32,000 or
- one half of the benefits (Whichever is lower.)