Millions of Americans collect Social Security benefits each month to survive, and around 40% pay taxes on that income.
Sometimes there is a raise due to COLA, and many individuals who are right on the edge of that line could see themselves subject to taxes with just a small increase of $1.
Combined income determines what you’ll need to pay in taxes, if any.
Social Security & Medicare, signing up for both
How taxes on Social Security benefits works
If you file a tax return with the IRS and your income as a single filer is between $25,000 and $34,000, you will probably pay taxes on up to 50% of your benefits.
If you make $34,001 you will be subject to taxes.
Jointly filing leaves anyone with income between $32,000 and $44,000 subject to taxes on up to 50% of their income.
Only claim benefits if you know these answers
$44,001 will put you at paying taxes on 85% of your benefits.
You will never need to pay taxes on more than 85% of your benefits.
The need to pay taxes is when people have income besides their Social Security benefits.
It’s ideal to have a retirement account or some type of supplemental income, but that is not the case for many.
If your only source of income is Social Security, it will likely be low enough that you won’t be subject to taxes.
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