IRS Tax Tip 2013-24, posted March 4 to IRS.gov, encourages taxpayers to take a second look at their 1099-SSA benefit statement before dismissing it as non-taxable income.
Although individuals who receive Social Security benefits as their only income source are generally exempt from tax filing, a certain amount of income in conjunction with Social Security may kick in a taxable portion of those benefits.
The key to the formula is looking at your income in combination with your filling status. Each filing status carries a “base amount.” Base amounts for 2012 are as follows:
- $25,000 for single, head of household, and married individuals who elect to file filing separately who did not live with their spouse at any time during the year
- $32,000 for married couples filing jointly
- $0 for married persons filing separately who lived together at any time during the year
Take your total Social Security benefits (as shown in Box 5 of Form 1099-SSA) and split them in half. To that figure, add all other income sources you have, including unearned income such as interest and dividends.
If the total is more than your base amount above, a portion of your Social Security income will be taxable.
The IRS has an online tool to assist you in determining what portion, if any, of your benefits are taxable. According to the IRS, the Interactive Tax Assistant will help you determine whether any of your benefits (and those of your spouse if you are married filing a joint tax return) are taxable. The application will not address benefits received on behalf of a dependent.