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Taxability of Social Security

taxation of social securityIn a comment on the article last week (Adjusting Withholding Saved 44% of the Tax Bill), a question came up about the taxability of Social Security benefits. It can be complicated, hopefully this explanation will help you understand taxability of Social Security a bit better.

Social Security is taxable at three different levels, based upon how much other income you have and your income tax filing status.

First, you need to calculate your Provisional Income – which is 50% of your household Social Security benefits plus all of your other taxable income, plus any tax-free income.

Next, there are two breakpoints in the taxation – if your filing status is Married Filing Jointly, the breakpoints are $32,000 and $44,000. If your filing status is Single or Head of Household the breakpoints are $25,000 and $34,000. These breakpoints are the same if your filing status is Married Filing Separately and the couple does not live together during the tax year. If your filing status is Married Filing Separately and the couple lives together, there are no breakpoints; in this case your Social Security is always 85% taxable.

The Calculation

Now it gets complicated – if your Provisional Income (defined above) is less than the first breakpoint based on your filing status, then none of your Social Security is taxable.

If your Provisional Income is greater than the first breakpoint but less than the second breakpoint, the amount greater than the breakpoint is 50% taxable. The amount under the first breakpoint is not taxed.

If your Provisional Income is greater than the second breakpoint, the amount above the second breakpoint is 85% taxable. This amount is added to the part that is 50% taxable (between the two breakpoints). The maximum amount that is taxable is 85%.

So for certain income levels, there is a sliding scale of the rate of taxability, ranging from 0% up to 85%. The chart below shows the taxation rates for a few levels of Social Security benefits with various income ranges. The chart shows only Married Filing Jointly status.

taxability of Social Security

As you can see, as the amount of your Social Security benefit increases, the window of taxation between 0% and 85% widens.

Taxability of Social Security Calculator

Below is a calculator I’ve developed to show you the amount of taxable Social Security benefits depending on your filing status and your other income amounts. Let me know if you have questions about this.

12 Comments

  1. Janice KesselerNo Gravatar says:

    My questions is not about. taxation, but I cannot find an answer on my on so here goes. My husband is on SSDI. As OF June 2016. He is 57 and has terminal cancer. l’m 64 born in 1953 and still working part time.. I have to continue working for our health insurance until he can get Medicare in 2yrs. . My income is $23000 per year. My SS even at 70 will not be as much as My survivor benifits from his SS when he passes. He receives 2180 in benifits now. I would receive 1600 at 70. We feel it would be best for me to file now even though it will be less for the few yrs he has left,. At 66 I would get about 1200. Can I apply for reduced spousal support or should I ask for my SS. It seems they both would be around 1000. Since our income is 1/3 of what it was we need all the extra we income we can get get. I know this seems harsh but we both understand we are working on barrowed time. Thanks. Janice

    1. jblankenshipNo Gravatar says:

      You definitely can file for your benefit now, but if you file now you will be subject to the earnings limit since you make more than $16,920 (or $1,410/month, 2017 figures). For each two dollars earned above that amount your benefit will be reduced by one dollar. So if you make $23,000 annually ($1917/month) and your benefit before reduction is $1,000, that amount will be reduced by an additional $253 due to your earnings.

      Filing now will not impact your potential survivor benefit in the future.

      1. Janice KesselerNo Gravatar says:

        Thank you for your quick response. I just received your book Social Security owners manual from Amazon today. So now I have my answers to various questions. Thanks for keeping people well informed.

  2. NateNo Gravatar says:

    So for federal tax purposes – given the information that Fred shared above – is his AGI = $42,548 + $15,511. Thank you.

    1. jblankenshipNo Gravatar says:

      The formula should be corrected now.

      1. NateNo Gravatar says:

        Allow me re-ask my question.

        When Fred files his taxes, what will be his AGI? The total of his “other” income of $42,548 plus the taxable portion of his Social Security? Thx!

        1. jblankenshipNo Gravatar says:

          Sorry! I misunderstood completely (that’s what I get for trying to answer these comments on my phone!).

          His AGI would be the taxable amount of SS benefits plus his other income, minus any tax-free income that was included in his “other income”.

  3. Fred BabakianNo Gravatar says:

    I think there is a problem with your calculator (I hope there is). I’m dealing with taxation of SS for the first time and manually followed the IRS worksheet. I had SS of $25282 and provisional income of $55469. That came out as $0 tax on first $32000, $6000 on the next $12000, and $9749 on the rest for a total of $15749 or 60% of my SS. Your calculator showed $21966 or 85% of my SS as taxable. Which result is correct?

    1. jblankenshipNo Gravatar says:

      What is your filing status? Also, you write that your provisional income is $55,469. Does this mean that your other income, aside from Social Security, is $42,828? With this information I’ll review and see what seems to be the issue…

      1. Fred BabakianNo Gravatar says:

        Filing status is Married. Other income is $42548. Many thanks for replying so quickly.

        1. jblankenshipNo Gravatar says:

          There was an error – apologies for the problem. It should be corrected now.

          Thank you for reaching out!

          1. Fred BabakianNo Gravatar says:

            Yup. Fixed! Keep up the good work. I’ve been reading articles on your site for several years now and have found many of them helpful.

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