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How Do I Calculate My Social Security Taxes?

By Dan Caplinger – Mar 28, 2016 at 7:02PM

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Some people have to include their benefits as taxable income. Are you one of them?

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Throughout your career, the Social Security payroll taxes you've paid have gone toward funding benefits for other recipients. But what might surprise you is that in some cases, a portion of your Social Security benefits can also be subject to tax even after you retire. Below, we'll look at the basics of how these taxes work and how you can calculate them.

How you can get taxed on your Social Security benefits
Social Security provides the bulk of most retirees' income in their golden years, and as the Social Security Administration points out, you'll typically have to pay income tax on Social Security benefits only if you have substantial income from other sources as well.

The starting point for the calculation is what the IRS calls your combined income. To calculate combined income, take one-half of your Social Security benefits and add it to your adjusted gross income from other sources, including wages, investment income, and self-employment income. Also, add in any tax-exempt interest payments you received.

The IRS takes your combined income and compares it to fixed threshold limits in the tax laws. These thresholds vary depending on your filing status, as shown below.

If Your Filing Status Is...

Then Up to 50% of Your Social Security Can Get Taxed If Your Combined Income Exceeds...

And Up to 85% of Your Social Security Can Get Taxed If Your Combined Income Exceeds...

Single, Head of Household, Qualifying Widow(er)



Married Filing Jointly



Married Filing Separately*



Data source: IRS. *If spouses lived together at any point during the year. Otherwise, the single limits apply.

Some details on the calculation
Most discussions of how much of your Social Security benefits are taxed end here, but the actual calculation involves a 19-line worksheet. We won't go through all the details here, but there are some key takeaways you should understand.

First, just because your combined income is slightly above the 50% threshold doesn't mean that you'll get taxed on 50% of your entire total Social Security benefits. For instance, if you're single and your combined income is $25,002, then you'll only pay tax on $1 of benefits -- half of the $2 by which your combined income exceeded the $25,000 threshold.

Similarly, just because your combined income climbs above the 85% threshold line doesn't mean that 85% of your benefits will be taxable. In fact, in some cases, less than half of your benefits will be taxed even if you're above that 85% line. For example, say you're single and have combined income of $34,002, consisting of Social Security benefits of $24,000 (half of which is $12,000) and other income of $22,002. In that case, $4,502 of your benefits would be taxable: half of the first $9,000 by which your combined income exceeds the lower $25,000 threshold, plus 85% of the $2 over the higher $34,000 threshold.

Finally, there's a planning note that you should consider. One of the most common ways that Social Security benefits get taxed is when one spouse in a couple retires and takes benefits while the other spouse is still working. In some cases, it can make a lot more sense for the retiring spouse to hold off on claiming Social Security until after the other spouse stops working. Depending on your age and your spouse's age, coordinating your benefits can lead to a less taxing result.

Social Security taxation can get complicated in a hurry, and many see it as inherently unfair. However, by knowing how to calculate your Social Security taxes, you can put yourself in a better position to pay as little as possible from your hard-earned benefits to the IRS.

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