SS_Medicare_flipbook_2017 - page 13

How Social Security Benefits Are Taxed
If your income exceeds certain income thresholds, you may
owe federal income tax on up to
50%
or
85%
of your
Social Security benefits.
The IRS uses your “combined income” to determine taxability of benefits.
Combined income is defined as your adjusted gross income plus any tax-exempt
interest (such as interest from municipal or savings bonds) plus 50% of your
Social Security benefit.
If you are married and file a separate tax return, you will probably pay taxes on
all your Social Security benefits. In addition, some states may tax Social Security
benefits, whereas other states may exempt them from taxation.
About 40% of current beneficiaries pay taxes on their
Social Security benefits.
Source: Social Security Administration, 2016
Taxable portion
of benefits
50%
$25,000 to $34,000 $32,000 to $44,000
85%
Over $34,000
Over $44,000
Married
joint filer
Single
filer
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