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Ask Megan C Your Own Question
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Social Security
Satisfied Customers: 16559
Experience:  Licensed CPA, CMA, CFE, CGMA M.Accy Also Teach Accounting courses at Master's Level
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I found this statement about taxation and social security: You

This answer was rated:

I found this statement about taxation and social security:
You will have to pay Federal taxes on your Social Security benefits if you file a Federal tax return as an individual and your total income is more than $25,000. If you file a joint return, you will have to pay taxes if you and your spouse have a total income of more than $32,000.

Use the Internal Revenue Service (IRS) Notice 703 shown on the back of the Social Security Benefit Statement, SSA Form 1099, to determine if any of your benefits may be taxable.

Social Security has no authority to withhold state or local taxes from your benefit. Many states and local authorities do not tax Social Security benefits. However, you should contact your state or local taxing authority for more information.

So, if I earn:
1. 23500 from an annuity and investments
2. 15120 from a job
3. 23,400 from social security

Are each of these 3 items considered "income?" Are any "not" income?

MyVirtualCPA :

I realize you have a question about social security. My goal is to help you better understand your options.

MyVirtualCPA :

How are you today?

MyVirtualCPA :

Yes, all three payments would be subject to income tax, although you would not pay tax on 100% of your social security

MyVirtualCPA :

You can use a calculator, HERE to calculate the amount of your social security benefit that would be taxable

Customer:

So, when they say if your income passes 25000, what constitutes "income?" Is it the annuity and the interest from the bonds I'm invested in?

Customer:

Is it the social security?

MyVirtualCPA :

Yes, your annuity income and work income is considered "income"

Customer:

So, then I'm well past 25000

Customer:

So, why do you say I wouldn't pay tax on "all" of my social security?

MyVirtualCPA :

It sounds like a portion is taxable to me. You can use the calculator I provided to determine how much is taxable

MyVirtualCPA :

Because the IRS applies a formula. You only pay tax on up to 85% of your benefit

MyVirtualCPA :

HOw much you pay depends on your other income

Customer:

ok. let me try the calculator. thanks. i think they purposely make it really difficult!

MyVirtualCPA :

I understand. Please let me know if you need further assistance, and please rate my response as "Excellent" so that I may receive credit for assisting you today

Customer:

Do you pay social security tax as well?

MyVirtualCPA :

No, you only pay social security tax when you work

MyVirtualCPA :

You don't pay social security tax on social security income

MyVirtualCPA :

You won't pay it on your annuity either

Customer:

social i would pay social security on the 15,120 job, but not the annuity or social secuity benefit. right?

MyVirtualCPA :

That is correct

Customer:

ok thanks

Megan C and other Social Security Specialists are ready to help you
Thanks, Charlotte for your positive rating. Please come back and visit MyVirtualCPA any time you need a tax, finance, or social security question answered. It was a pleasure working with you.

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