1. Are Social Security benefits subject to federal income tax?
This will depend on your total income, because the more you make, the more taxes you pay on your benefit. If you file as an individual and your combined income – your adjusted gross income plus one-half of your Social Security benefits- is below $25K you will not be taxed at all. If your income is between $25K-$34K up to 50% of your benefits can be taxed and if you make more than $34K, 85% of your benefits are taxable.
If you file with your spouse, and have a combined income lower than $32K, your benefits won’t be taxed. A combined income between $32K-$44K is subject to a 50% percent tax on benefits, and if your income is more than $44K, 85% of your benefits are taxable.
2. How much money does the federal government collect from taxes on Social Security? What happens to that money?
A total of $45.9 billion dollars was paid by Social Security beneficiaries on their benefits in 2012. Of that, $27.3 billion was given to the Social Security Trust Funds, accounting for 3.2% of its income. The Medicare Hospital Insurance Fund got $18.6 billion from the tax fund, which accounted for 7.7 % of its income.
3. How can I get the government to withhold taxes from my Social Security benefits?
Call Social Security at 800-772-1213 and ask for IRS Form W-4V. You can also get the Voluntary Withholding Request form online. The form gives you four choices as to how much money you want to withhold from your monthly payments.
4. Do states tax Social Security benefits?
27 states do not tax Social Security income. Depending on a variety of rates and policies, the rest of the states may or may not tax Social Security benefits. See a map showing what happens in each state here.
Visit the AARP for more information.
|Kenneth G. Marks has been practicing personal injury law since he was admitted to the California Bar in 1981. www.KmarksLaw.com|