How much social security income is taxable in 2013
Why am I being taxed at all? For more information, see our article on which states tax disability benefits.
Here are seven tips about how Social Security affects your taxes: If Social Security was your only source of income inyour benefits may not be taxable. You also may not need to file a federal income tax return. If you get income from other sources, then you may have to pay taxes on some of your benefits. Your income and filing status affect whether you must pay taxes on your Social Security.
The best, and free, way to find out if your benefits are taxable is to use IRS Free File to prepare and e-file your tax return. The software will figure the taxable benefits for you. Free File is available only at IRS.
For example, a "5 percent reduction" would occur if a person's income fell enough to move them from a 15 percent marginal tax bracket to a 10 percent tax bracket. Likewise, a "10 percent reduction" would occur if a person went from a 25 percent tax bracket to a 15 percent tax bracket.
For each of the life expectancies, we assume that the tax rate reduction occurs at some age greater than the optimal claiming age shown in the above table in the "No Change" column that is, when there in no tax rate change.
For instance, for the year life expectancy the first row of datawe assume that any tax rate reduction occurs at age 63 or later.
Likewise, for the year life expectancy, we assume that any tax rate reduction occurs after age If a tax rate reduction occurred at age 67 or earlier, it would have no affect on the optimal claiming age. Our analysis of the tax issue reveals the following important point.
A future tax bracket reduction has its biggest impact when the change occurs immediately after the optimal claiming year. The impact diminishes as the tax bracket change moves further away from the optimal claiming year. To illustrate, look at the third row of numbers in the above table for an 85 year old person.
Are Your Social Security Benefits Taxable?
If a tax rate reduction occurs at age 69 without affecting the optimal claiming age, then that same reduction at age 70 or later would, likewise, have no impact on the optimal claiming year.
In contrast, suppose a tax rate reduction at age 70 shifts the optimal claiming age from 69 to That same tax rate reduction at age 71 or even later might also increase the optimal claiming year to age But, the impact of a tax rate reduction diminishes as the time between the no-tax change optimal claiming year and the tax-cut year increases.
How Social Security Income is Taxed
For example, suppose a substantial tax rate reduction at age 72 or 73 shifts the claiming year from 69 to The same tax rate reduction at age 80 would have no impact on the optimal claiming year. Rhode Island is changing how it taxes Social Security benefits.
In a separate document, the Division of Taxation details this change in how the state taxes Social Security benefits:. First column refers to filing status on your Rhode Island personal income tax return.
Taxes and Social Security Benefits
Vermont follows the federal rules for determining the taxable portion of Social Security benefits. West Virginia follows the federal rules for determining the taxable portion of Social Security benefits.
Updated April 07, What about on the backpay I should receive for the monthly benefits I miss while my application is being processed? For the majority of people, Social Security Disability benefits are not taxable. This is true for people who have income in addition to disability benefits as well as those who do not. SSI recipients rarely have to pay taxes, because if they had enough income to be taxed, they wouldn't qualify for SSI.
If you or your spouse have another source of substantial income, it's likely your SSDI benefits could be taxed by the federal government.