Social Security Benefits: What's Taxable and What's Not

Navigating the Tax Implications

Understanding Income Thresholds

Depending on your financial situation, your Social Security benefits may be subject to federal income tax. According to the Internal Revenue Service (IRS), the following income thresholds apply:

• Between $32,000 and $44,000: Up to 50% of your benefits may be taxable.
• More than $44,000: Up to 85% of your benefits may be taxable.
• For married couples filing jointly: The thresholds are $32,000 and $44,000 if you file separately or $44,000 and $56,000 if you file jointly.

Reporting Taxable Benefits

If your income exceeds the applicable thresholds, you must report the taxable portion of your Social Security benefits on line 6b of Form 1040 or Form 1040-SR. Failure to do so may result in tax penalties.

Additional Considerations

It's important to note that not all Social Security benefits are taxable. Supplemental Security Income (SSI) is completely tax-free. Additionally, if you receive Social Security disability benefits, only the portion that exceeds your adjusted cost basis is taxable.