Sorry, but it’s true: you may have to pay federal income tax on part of your Social Security benefits.
If Social Security was your only income in 2014, your benefits will not be taxable, and, most likely, you will not even need to file a federal income tax return. However, if you get income from other sources you may have to pay taxes on some of your benefits.
The IRS uses a formula to determine how much, if any, of your Social Security benefits are taxable for income tax. Here’s a quick way to find out if you must pay taxes on your Social Security benefits: Add one-half of your Social Security to all your other income, including tax-exempt interest. Then compare the total to the base amount for your filing status. If your total is more than the base amount, some of your benefits may be taxable.
The three base amounts are:
$25,000 – if you are single, head of household, qualifying widow or widower with a dependent child or married filing separately and lived apart from your spouse for all of 2014
$32,000 – if you are married filing jointly
$0 – if you are married filing separately and lived with your spouse at any time during the year
For more information on this topic visit IRS.gov. and download a copy of Publication 915, Social Security and Equivalent Railroad Retirement Benefits.
