Social Security Benefits and Taxes

One of the first questions most Social Security benefit recipients want to know is if their Social Security income is taxable income. If you are still working when you receive Social Security benefits and you have income from other sources, it is possible that a portion of your Social Security income will be taxable. For more helpful information, read this PDF file: Tax Guide for Retirees. In general, if your only income is Social Security, Supplemental Security, disability income, or other similar income, then you do not owe taxes.

Determine if you need to file taxes using this simple tool

Quick and easy instructions: Add Form SSA-1099 to your account

If your only income is Social Security and income from a job for which you receive a W-2, your federal return is generally free on eFile.com. Here is a Special Senior Promo Code that will enable you to prepare and eFile your taxes for free or up to 60% less if you have any pricing concerns when filing. You must have started a Tax Return on eFile.com and entered your income data in order to qualify.

Do you have no other income but which to file a tax return for different reasons? Learn more about no income tax returns or SSI only tax returns.

Start Your Tax Return
Already have an eFile.com account? Sign In

How Is Social Security Taxed?

Generally, if your Social Security benefits are your only source of income, then they are usually not considered taxable income and thus not taxed by the IRS. If you receive Social Security benefits, you will be sent Form SSA-1099 which will show the total dollar amount of your Social Security income for the given tax year. If you are retired, you may also get a 1099-R for other retirement income - learn how to add 1099-R details to your return.

Related: Which states tax Social Security income?

Whether or not your Social Security income is taxable - and how much is taxable - depends on your total income from all sources and your IRS tax return filing status.

Social Security.
Income

Social security benefits are generally not taxable, unless:

A: A taxpayer is filing separate return and the taxpayer lived with the spouse at any time during the current tax year.

B: If one-half of your social security income plus your other gross income and any tax-exempt interest (yes, tax-exempt interest, it is stated like this in publication 501) is more than $25,000 for singles, married filing separate, head of household and $32,000 and above if married filing jointly. This is also called, combined income or:

• Combined Income = Adjusted Gross Income or AGI plus Non-taxable Interest plus 1/2 of Social Security income or benefits. Determine your current tax year AGI by either using the current tax year free calculator or by starting a free tax return.

In case A or B applies to a taxpayer, start a free return via the eFile tax app before you eFileIT to determine the taxable portion of social security income or benefits. Your income may be taxed on 50% of your benefits or up to 85%, calculated by the eFile website.

For the current tax year start a free tax return on eFile.com: sign-up free now. The eFile tax return calculation is comprehensive and reliable. Based on the information you provide through the online tax questions via information from your Form 1099-SSA and other income sources (W-2 from wages or salary, 1099 from self-employment or contract or retirement income) if you have them, we will then determine whether or not you have to pay taxes on your Social Security income. As a result, the eFile.com tax application will calculate the amount and prepare all the income tax return forms necessary for you so you can e-File your tax return and report your Social Security benefits. If you need more information on Social Security and how it affects your tax return, see more below.

Generally, your Social Security income will only be taxed if you have income from other sources and your combined income is more than a certain base amount. If Social Security is your only source of income, then you typically do not need to file a tax return. Of course, there may be other reasons that you need to file a return.

Social Security income includes:

• Elderly or disabled benefits
• Monthly retirement benefits
• Survivor benefits.

Social Security income does not include:

• Pension and annuity income
• Wages
• Interest
• Ordinary dividends
• Capital gain distributions.

The above would be considered other sources of income and, if you have any of these, then you will likely need to file a tax return along with your Social Security benefits. Social Security income also does not include Supplemental Security Income (SSI) or disability payments; those payments are not taxable.

Below are samples that should help you better understand different scenarios with social security income.

See if Your Social Security Income Might Be Taxable

1. Add half of your Social Security income to all of your other income, including non-taxable interest and other excluded income. This income will be taxed at up to 50% if within the range below, or up to 85% if it is more than the upper end of the threshold. 
2. Compare this total to the base amount for your filing status:
   • Single - $25,000 - $34,000
   • Married filing jointly - $32,000 - $44,000
   • Head of household - $25,000 - $34,000
   • Qualifying widow(er) with dependent child - $25,000 - $34,000
   • Married filing separately - $25,000 - $34,000 (if the spouses did NOT live together at all during the year). If the spouses lived together during the year, the amount is $0.
   • For nonresident aliens, 85% of benefits are to be taxed at a rate of 30%.
3. If your total income is more than the base amount, you might owe some tax on your Social Security benefits. You can use the worksheet in the Form 1040 instructions or use the easiest method which is to prepare your return on eFile.com to find out exactly how much of your Social Security income is taxable - start here free.

Here are some examples of social security income and how much is taxable and how much is not:

Example 1 - Randy will be filing with a single filing status on his return. His income includes a taxable pension of $18,600, W-2 wages of $9,400, and taxable interest of $990 for a total of $28,990. In addition, he has social security benefits of $5,980. In this case, his taxable social security benefits would be $2,990, so only about 50% of his social security income is taxable.

Example 2 - John and Denise are married and will be filing with a married filing joint filing status on their return. John is retired and his income includes a taxable pension of $15,500. He also received $5,600 in social security benefits. Denise had W-2 income of $14,000. Denise made a deductible payment to her IRA for $1,000. They both have about $250 in taxable interest income for a total of $34,350, minus half of the Social Security income to reach $31,550. In their case, none of John's social security income is taxable.

Example 3 - Sue and Joe are married and will be filing with a married filing joint filing status on their return. Joe is retired and received a Form RRB-1099 for railroad retirement benefits for $10,000. Sue is also retired and her income is from a taxable pension for $38,000. They both have $2,300 in taxable interest income and $200 from a savings bond. In this case, their taxable social security benefits would be about $6,275 or 63% of Joe's social security income.

Social Security Income and Other Types of Income

If you also had income from other sources, your Social Security income will only be taxed if your combined income is more than a certain amount. This amount (called the base amount) depends on your filing status, but you don't just add all of your income together and compare it to the base amount. There is a worksheet to help you calculate it. This is because even if your Social Security is taxable, only a portion of it will actually be taxed. The maximum amount that may be taxed is 85% and this is all calculated by eFile.com when you prepare your return.

There are a few things that could make the computations even more complicated and could make you owe a bit more or less tax on your benefits. These include receiving foreign income, receiving and excluding income from Series EE or Series I U.S. Savings Bonds, receiving adoption assistance from your employer, contributing to an IRA while being covered by a qualified retirement plan, and receiving Railroad Retirement Benefits.

You can generally receive Social Security income if you retire in a foreign country. See if your country qualifies here:

Social Security Administration Payments Abroad Screening Tool

Because it is so complicated to calculate the amount of Social Security income that is taxable, it is highly recommended that you use tax software, such as eFile.com, to prepare your tax return.

Social Security Income and your State Return

Does your state tax Social Security income? What about other retirement income? Military retirement income? Which state is the best to retire in? Use the state map below to learn about each state and how they handle taxes on certain retirement income.

Interactive State Map

Click on one or more of the states in the map below to visit a specific state page. Links to these pages are also found in the table below.

Most states do not tax Social Security income, but there are 13 states that do:

• Colorado
• Connecticut
• Kansas
• Minnesota
• Missouri
• Montana
• Nebraska
• New Mexico
• North Dakota
• Rhode Island
• Utah
• Vermont
• West Virginia.

How these states tax Social Security depends on your adjusted gross income (AGI) and other criteria. Check your state's tax information for more details.

Social Security and Taxes - A Brief History to Current

Just about everyone who earns income from working has to pay FICA (Federal Insurance Contributions Act) tax. This payroll tax is made up of Social Security and Medicare taxes which are used to ensure that those government programs remain funded. Employees have Social Security and Medicare taxes withheld from their pay along with income taxes. The self-employed have to pay Social Security and Medicare taxes through self-employment taxes.

The amount that you pay in Social Security taxes throughout your working career is associated with the Social Security benefits that you receive later in life, but the amount you contribute will not equal the amount of benefits to which you have access to. You generally owe Social Security taxes on the first $160,200 of your gross income in 2023, up from $147,00 in 2022. Medicare taxes are generally paid on 100% of your annual income.

Excess Social Security Tax

If you had more than one employer who each withheld taxes from your pay and if your total gross income was over $160,200, then you may have had too much money withheld for Social Security taxes. Any Social Security taxes paid on $160,200 or more is considered excess Social Security tax and will be refunded to you (or credited against your income tax balance due) when you file a tax return. If your employer erroneously withheld too much Social Security and/or Medicare taxes from your pay (for example, more than 7.65%), you should ask your employer for a refund of the over payment before filing a tax return.

Unreported Social Security and Medicare

When your employer pays you wages, they are required to withhold a portion of your paycheck for Social Security and Medicare taxes. It sometimes happens that an employer might not withhold enough of these taxes and you might have to pay these taxes when you file your return. In addition, you will most likely need to file a Form 8919. If this is the case, since Form 8919 cannot be e-filed, you can use our online document editor to complete, download, and print the form to mail with your eFile.com prepared tax return so that you can pay the needed taxes and file the required Form 8919 with your return.

How to e-File Social Security on Your Tax Return

If you prepare your tax return on eFile.com and you have taxable income, we will calculate and determine the correct amount of tax on your Social Security benefits and help prepare the correct forms that you need to report your Social Security income with your return. If any amount of your Social Security benefits are taxable, you can file your tax return on Form 1040.

Learn more about Social Security and your taxes in IRS Publication 915 - Social Security and Equivalent Railroad Retirement Benefits.

TurboTax^® is a registered trademark of Intuit, Inc.
H&R Block^® is a registered trademark of HRB Innovations, Inc.