What percentage of social security benefits is taxable?
-E.F., Willow Grove, PA
OK, get your calculators out. The answer is anywhere from 0 to 85%, depending on your income
level. The first calculation you need to make is to determine your "provisional
income". This is your adjusted gross income plus tax-free income plus
one-half of social security benefits. Got that? Good. Now, if this amount is under
$32,000 for a joint return or $25,000 for a single return, congratulations - you pay
no tax on your social security. Of course, you're probably starving, but at least you don't
pay tax. If your provisional income is between $32,000 and $44,000 ($25,000 and $34,000 for single),
you fall into the "lower income" level. In this case, you would pay tax on the lower of: 1) one-half of your
social security benefits, or 2) one-half of the difference between your provisional income and $32,000 ($25,000 if single). If
your provisional income is above $44,000 ($34,000 if single), you fall into the "higher income"
level. The taxable benefits would be the lesser of the following: 1) 85% of your social security benefits,
or 2) 85% of the difference between your provisional income and $44,000 ($34,000 if single) plus the
smaller of: i) the answer from the "lower income" part above, or ii)$6,000 ($4,500 if single).
Clear as daylight, right? Bottom line here: if this question comes up, call me.
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