by Rusty Woods
Some people who receive Social Security benefits will have to pay federal income taxes on their benefits:
Lump Sum Death Benefit:
Income tax free
Retirement, Survivor and Disability Benefits:
Income tax free, unless income exceeds a specified base amount.
The base amounts are:
• $25,000 if you are single or head of household.
• $32,000 if you are married filing jointly.
• $25,000 if you are married filing separately and lived apart from your spouse for all of the year.
• $-0- if you are married filing separately and lived with your spouse at any time during the year.
To find out whether any of your benefits may be taxable, compare the base amount for your filing status with the total of (1) one-half of your Social Security benefits, plus (2) all your other income, including tax-exempt interest. If you are married and file a joint return, you and your spouse must combine your incomes and your benefits to figure whether any of your combined benefits are taxable. Even if your spouse did not receive any benefits, you must add your spouse’s income to yours to figure whether any of your benefits are taxable.
If the total is more than your base amount, part of your benefits may be taxable. How much is taxable depends on the total amount of your benefits and other income…the higher that total amount, the greater the taxable part of your benefits. Generally, up to 50% of your benefits will be taxable. However, up to 85% of your benefits can be taxable if either of the following situations applies to you:
• The total of one-half of your benefits and all your other income is more than $34,000 ($44,000 if you are married filing jointly).
• You are married filing separately and lived with your spouse at any time during the year.