Figuring Federal Income Tax on Social Security
- 1). Use Internal Revenue Service Worksheet A in IRS Publication 915 to determine the degree to which your Social Security benefits are taxable. Before you begin the worksheet, you'll need your SSA-1099 as well as any other income or earning statements, such as W-2s, 1099s, or interest and dividend statements. In box A of Worksheet A, enter the amount from box 5 of your SSA-1099 as well as any lump-sum payments received during the tax year. In box B, enter half the amount of box A. In box C, enter all other taxable income such as dividends, wages and interest from investments. In box D, input any tax-exempt interest on income. In line E, enter the total from lines B, C and D.
- 2). Compare the amount entered in line E with your "base amount." Your base amount depends on your filing status. It is $25,000 for singles, heads of household or widows and widowers; $25,000 for married filing separately and living apart; $32,000 for married filing joint; and $0 for married filing separately and living together. If the amount on line E is equal to or less than your base amount, none of your benefits is taxable. If the amount on line E is greater than your base amount, a portion of your benefits is taxable.
- 3). Report your taxable benefits on either Form 1040 or 1040A. On Form 1040, enter the amount from box 5 on your SSA-1099 on line 20a and line 14a on Form 1040A. The total taxable amount of your benefits will be determined by your income. Usually no more than 50 percent of Social Security benefits are subject to tax. To figure the exact amount of your benefit, complete Worksheet 1 found in IRS Publication 915 using the link in Resources.
- 4). Complete IRS Form 1040 or 1040A (with the only exception being the line that pertains to the taxability of your benefits as that's what you still need to calculate). Now, begin Worksheet 1. The worksheet will require that you enter amounts from your Form 1040 or 1040A as well as your SSA-1099 to figure your taxable benefit amount.
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