Wednesday, February 16, 2011

Are Your Social Security Benefits Taxable?

Blog posting provided by Michael Snowdon, CFP

As you prepare your 2010 taxes, some of your Social Security (SSA) benefits may be taxable. According to the IRS, you should receive a Form SSA-1099 which will show the total amount of your benefits. Here are some guidelines from the IRS to determine whether any part of your benefits are taxable.

1. How much of your SSA benefits may be taxable depends on your income and marital status.

2. Generally, if your only income was from SSA benefits, they probably are not taxable.

3. If you had additional income, your SSA benefits won't be taxed unless your modified adjusted gross income (MAGI) exceeds your base amount (see #6 below.)

4. Your taxable benefits and MAGI can be determined on a worksheet in Form 1040A or the 1040 instruction booklet.

5. You can do the following quick computation to determine whether some of your benefits may be taxable:

a. First, add one-half of the total SSA benefits you received to all your other income.

b. Then, compare the total to your base amount. If the total is more than your base amount, some of your benefits may be taxable.

6. Base amounts for 2010:

a. Married filing jointly: $32,000

b. Single and most others: $25,000

c. Married filing separately (if you lived together during the year): $0


For additional information on Social Security benefits, see IRS Publication 915.

To see the IRS notice referred in this post:
www.irs.gov/newsroom/article/0,,id=17909,00.html

Michael Snowdon, CFP, President
T: 303-721-1140: 888-326-5557 Ext. 4 / F: 866-437-3843 / W: http://www.wealthridge.com/ Wealthridge . 8400 E. Crescent Parkway, Suite 600 / Greenwood Village, CO 80111