Paying Taxes on Retirement

Monthly retirement, survivor, and disability payments are all available from Social Security. Supplemental security income (SSI) payments aren’t included because they aren’t taxable. You record the net amount of social security benefits you earn from the Social Security Administration in Box 5 of Form SSA-1099, Social Security Benefit Statement, on your income tax return (Form 1040, line 20a or Form 1040A, Line 14a). The number of taxable benefits included in your salary and used to measure your income tax obligation is determined by the cumulative amount of your income and benefits for the taxable year. Form 1040, line 20b, or Form 1040A, line 14b, is where you declare the taxable part of your social security benefits. Compare the base number for your filing status with the balance to see if all of your benefits are taxable:

▪ One-half of your benefits; plus

▪ All of your income, including tax-exempt interest.

The base amount for your filing status is:

▪ $25,000 if you’re single, head of household, or qualifying widow(er)

▪ $25,000 if you’re married filing separately and lived apart from your spouse for the entire year,

▪ $32,000 if you’re married filing jointly,

▪ $0 if you’re married, filing separately, and lived with your spouse at any time during the tax year.

If you’re married and file a joint return, you and your spouse must combine your incomes and social security benefits when figuring the taxable portion of your benefits. Even if your spouse didn’t receive any benefits, you must add your spouse’s income to yours when determining a joint return if any of your benefits are taxable.