This Tax Tip Spotify Podcast and/or WordPress Blog Post deals with if you are currently receiving social security (or equivalent railroad retirement) benefits, you may have to include in income a portion of the net benefits you receive during the year. If you receive either of these benefits during the year, you should receive a Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, showing the gross amount and net amount of benefits you received.
- $32,000 if you are married filing jointly,
- $0 if you are married filing separately and lived with your spouse at any time during the tax year, or
- $25,000 in any other case.
If you are married and file a joint return, you and your spouse must combine your incomes and benefits to figure whether any of your combined benefits are taxable, even if only one of you received social security benefits.
If your social security benefits are taxable, the amount of such benefits you must include in your gross income is generally equal to the lesser of:
In some cases, however, you may have to include in income up to 85 percent of your benefits. Special rules apply if you receive a lump-sum distribution of social security benefits; if you have repaid social security benefits and your repayments exceed the gross benefits you receive; or if you receive social security benefits, have taxable compensation, contribute to a traditional IRA, and are covered (or your spouse is covered) by an employer retirement plan.
If you are a nonresident alien, the rules discussed here do not apply to you. Instead, 85 percent of your benefits are taxed at a 30 percent rate, unless exempt (or subject to a lower rate) by treaty. Under tax treaties, residents of Canada, Egypt, Germany, Ireland, Israel, Italy, Japan, Romania, and the United Kingdom are exempt from U.S. tax on their benefits.
Please contact the office of Don Fitch Accountancy at (760)567-3110 or Email Don.Fitch@CPA.com if you have any questions or would like additional information.
DON FITCH, CPA
74478 Highway 111 #3
Palm Desert, CA 92260
Toll Free: (877)CPA-Help or (877)272-4357
P.S. My firm is based upon referrals. Please feel free to refer my firm to anyone you know that is looking for a new CPA and/or tax preparer. Thank you in advance.
(Updated 05252021-1 320-465)