How your Social Security benefits are taxed

The Social Security benefits you received in 2023 may be taxable. Each January, you should receive a Form SSA-1099 (Social Security Benefit Statement) which will show the total amount of your benefits. The information provided on this statement along with the following facts from the IRS will help you determine whether your benefits are taxable.

• How much, if any, of your Social Security benefits are taxable depends on your marital status and gross income.  

• Generally, if Social Security benefits were your only income for 2023, your benefits are not taxable and you probably do not need to file a federal tax return.

• If you received income from other sources, your benefits will not be taxed unless your modified adjusted gross income (MAGI) is more than the base amount for your filing status.

• The 2023 base amounts are: $32,000 for married couples filing jointly, $25,000 for the other filing statuses, $0 for married persons filing separately who lived together during the year.

• You can do the following quick computation to determine whether some of your benefits may be taxable: First, add one-half of the total Social Security benefits you received to all your other income, including any tax-exempt interest. Then, compare this total to the base amount for your filing status. If the total is more than your base amount, some of your benefits may be taxable.

• If you are single and your total combined income for the year is between $25,000 and $34,000, then up to 50 percent of your benefits can be taxed. If your income is greater than $34,000, then up to 85 percent of your benefits can be taxed. An example:

Ashley, who is single, has 2023 earnings of $16,000, $500 in interest income, and $700 in dividends. She also receives $10,800 net Social Security benefits. Ashley’s provisional income is $22,600 [$16,000+$500+$700+$5,400 (one-half of the net Social Security benefits)]. Since $22,600 does not exceed the $25,000 base amount, none of Ashley’s Social Security benefits are taxable.

Married couples filing jointly whose combined income is between $32,000 and $44,000, up to 50 percent of your benefits can be taxed. Incomes greater than $44,000 are taxed at the 85-percent rate. Another example:

Brandon and Sydney, a husband and wife who have $24,000 in Social Security income and $25,000 of other income would pay taxes calculated as follows: These taxpayers would add half of their Social security income ($12,000) to their $25,000 in other income for a provisional amount of $37,000. Next step, find the amount by which their income exceeds the $32,000 threshold ($37,000-$32,000). The excess amount is $5,000 and half of that is $2,500. Now all they have to do is add $2,500 in taxable Social Security income to their other income and their total taxable income becomes $27,500.

• The federal taxable portion of your Social Security benefits cannot exceed 85 percent of your total benefits. Most importantly, all Social Security benefits are exempt from New York State and New York City taxes.

• If you do have to pay federal taxes on your Social Security benefits, you can have the taxes withheld from your benefits. You can choose to have 7 percent, 10 percent, 12 percent or 22 percent of your total benefit payment withheld. Simply complete Form W-4V, Voluntary Withholding Request, and file it with the Social Security Administration (1-800-SSA-1213). Alternatively, you can make quarterly estimated tax payments to the IRS.

• If both you and your child received Social Security benefits, you must use only your own portion (and not your child’s portion) of the benefits in figuring if any part is taxable on your tax return.

For additional information on the taxability of Social Security benefits, see IRS Publication 915, "Social Security and Equivalent Railroad Retirement Benefits." This publication is available on the IRS website, http://www.irs.gov, or by calling 800-829-1040.

Barry Lisak is an IRS enrolled agent specializing in personal and small business taxes for 30 years. Any questions can be directed to him at 516-829-7283, or mrbarrytax@aol.com.