Do You Have to Pay Taxes on Your Social Security Benefits?

Social Security TaxesDo you know how much your Social Security benefits can be taxed? According to the Internal Revenue Service (IRS) located at www.irs.gov, Social security benefits include monthly retirement, survivor and disability benefits. They don’t include supplemental security income (SSI) payments, which aren’t taxable. The net amount of social security benefits that you receive from the Social Security Administration is reported in Box 5 of Form SSA-1099, Social Security Benefit Statement, and you report that amount on your income tax return (Form 1040, line 20a or Form 1040A, Line 14a).

The IRS continues by stating that the taxable portion of the benefits that’s included in your income and used to calculate your income tax liability depends on the total amount of your income and benefits for the taxable year. You report the taxable portion of your social security benefits on Form 1040, line 20b or Form 1040A, line 14b.

Some people must pay taxes on part of their Social Security benefits. Others find that their benefits aren’t taxable. If you get Social Security, the IRS can help you determine if some of your benefits are taxable.

Here are five tips about how Social Security affects your taxes:

1. If you received these benefits in 2017, you should have received a Form SSA-1099, Social Security Benefit Statement, showing the amount.

2. If Social Security was your only source of income in 2017, your benefits may not be taxable. You also may not need to file a federal income tax return.

3. If you get income from other sources, then you may have to pay taxes on some of your benefits.

4. Your income and filing status affect whether you must pay taxes on your Social Security.

5. To find out whether any of your benefits may be taxable, compare the base amount for your filing status with the total of:
• One-half of your benefits; plus
• All of your other 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.

Tax Formula Tip: Here’s a quick way to find out if a taxpayer must pay taxes on their Social Security benefits: Add one-half of the Social Security income to all other income, including tax-exempt interest. Then compare that amount to the base amount for their filing status. If the total is more than the base amount, some of their benefits may be taxable.

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 figuring on a joint return if any of your benefits are taxable.

You can figure the taxable amount of the benefits on a worksheet in the Instructions for Form 1040, Instructions for Form 1040A, or in Publication 915, “Social Security and Equivalent Railroad Retirement Benefits“.

If you find all this confusing, I suggest watching this IRS produced YouTube video: https://www.youtube.com/watch?v=qIzmSqHrHlM

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Avoiding Identity Theft and Protecting Your Social Security Number

SSN Theft

Today the Social Security Administration (SSA) Office of the Inspector General reported that a New York woman admitted to owning and operating a website in 2013 and 2014 through which she sold stolen Social Security Numbers (SSNs).

She advertised these stolen SSNs as “credit profile numbers” and encouraged her customers to use these SSNs in place of their own on credit and loan applications, as a way for customers to avoid their own negative credit histories. She faces up to 30 years in prison, up to 5 years of post-imprisonment supervised release and a maximum $250,000 fine when she is sentenced on May 14, 2018. For details see https://oig.ssa.gov/audits-and-investigations/investigations/jan9-ny-ssn-fraud

HOW YOU CAN AVOID IDENTITY THEFT AND PROTECT YOUR SOCIAL SECURITY NUMBER
To protect your Social Security Number the Social Security Administration (SSA) suggests the following:
• Never list an SSN when posting a paper record on a public bulletin board
• Never send SSNs via an electronic format
• Never have a computer log-in system where a person has to use their SSN
• Never use SSNs on ID cards
• Never send SSNs on postcards
• Never store SSNs on unprotected computer systems
• Never carry a Social Security Number card on your person

RESOURCES: PREVENTING IDENTITY THEFT AND EFFECTIVELY RESPONDING
According to the SSA the issue of improper or unnecessary use of SSNs is still very much on the public’s radar. The Office of the Inspector General (OIG) returned to this issue in a 2011 field hearing concerning use and protection of SSNs and child identity theft, and has audited use and protection of SSNs by hospitals, schools and prisons, not to mention SSA itself.

You can find other recent OIG Audit reports at http://oig.ssa.gov/audits-and-investigations/audit-reports/all . Also, there have been several bills in Congress on the general issue of use of SSNs as identifiers which, if passed, could make the issue very current again http://thomas.loc.gov/ .

ADDITIONAL INFORMATION ABOUT IDENTITY THEFT
The SSA recommends a number of resources which provide additional information on dealing with identity theft and how to prevent it, including:
• FTC is the lead federal agency on identity theft. Their website is http://www.consumer.gov/idtheft/
• SSA offers a great deal of information on SSNs on our internet site at http://www.ssa.gov/ssnumber/.

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