Are Social Security Benefits Taxable? Here is the
Bad News from Social Security
Small business owners should know SSA has services
online to help complete W-2s
Feb. 6, 2014 - Do you have to pay income tax on the
Social Security benefits you receive? The answer in this week’s Social
Security Q&A may surprise many. Did you know the Social Security
Administration has online help to assist small businesses with their
W-2s? Another answer that may be news to many.
Are Social Security benefits taxable?
Yes, some people have to pay
federal income taxes on their Social Security benefits. This usually
happens only if you have other substantial income such as wages,
self-employment, interest, dividends, and other taxable income that must
be reported on your tax return in addition to your Social Security
There is never a case when a person
pays tax on more than 85 percent of his or her Social Security benefits,
based on Internal Revenue Service (IRS) rules.
Now, let’s get down to the numbers.
If you file a federal tax return as an individual and your income is
between $25,000 and $34,000, you may have to pay income tax on up to 50
percent of your benefits. If your income is more than $34,000, then up
to 85 percent of your benefits may be taxable.
If you are married and you file a
joint return, and you and your spouse have a combined income that is
between $32,000 and $44,000, you may have to pay income tax on up to 50
percent of your benefits.
If your combined income is more
than $44,000, then up to 85 percent of your benefits may be taxable.
Your “income” for the purpose of
determining whether you must pay taxes on some of your Social Security
benefits includes your adjusted gross income, your nontaxable interest,
and one half of your Social Security benefits.
In January, you should have received a Social
Security Benefit Statement showing the amount of benefits you received
last year. You can use this statement, or SSA-1099, when completing your
federal income tax return to find out whether some of your benefits are
subject to federal income tax.
I run a bed and breakfast. By this time every
year, I am tired of all the paperwork involved with filing taxes. Is
there an easier way for small businesses to file W-2s for their
Absolutely. If you are a small business owner or
entrepreneur, you should check out Social Security’s Business Services
Online (BSO) website. There, you can file your employees’ W-2s and W-2cs
electronically and print out the W-2s to provide paper copies to your
You also can verify the Social Security numbers of
your employees. Our online services are easy to use, fast, and secure.
Visit our BSO page at
Oscar Garcia is a Public Affairs Specialist with
the Social Security Administration. You can direct your questions to him
at: SSA, 411 Richland Hills Drive, San Antonio, Texas, 78245. You can
also email him at Oscar.firstname.lastname@example.org.
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