Social Security Tax Limits For 2013, 2014

According to the Social Security Administration, 34% of people who receive social security payments pay taxes on them. Your personal need to pay taxes depends upon the combined income you receive from all sources.

The SSA has a special calculation to determine this. On your form 1040 tax return, line 37 shows your adjusted gross income. Add tax exempt interest and half of your Social Security benefits to this number to find out if you need to pay taxes on it.

The income thresholds are different if you are single or married.

If you are single and make less than $25,000 a year, you do not have to pay taxes on Social Security income. Married couples do not have to pay if their combined income is no greater than $34,000.

If either single or married people earn approximately $10,000 more than these limits, they are required to pay taxes for half of their Social Security income. Anything over those amounts and 85% of your SSI is taxable. No one pays taxes on 100% of their Social Security benefits.

IRAs Can Bump up Yearly Income

These limits are often reached when people need to take required minimum distributions from IRAs and other retirement savings accounts. This happens at the age 70 1/2 and could bump yearly income up over the margins.

Even if your actual income is lower and falls well within the range outlined above, you’re required minimum distribution can push you into another tax bracket. This is especially true if you are married and filing jointly and both spouses have retirement accounts from which required minimum distributions are taken.

Married Couples Earning More Than $44,000 per Year

People who believe older Americans are getting too much social security without being taxed should consider all these facts. Even if an individual’s Social Security payments are higher, they must pay a considerable tax amount back to the Federal government.

Any married couple who earns more than $44,000 a year will be paying back approximately $7500 to the IRS every year. Some states also require you to pay taxes on Social Security income.

Published at: Articlicious Article Directory

Click here for Article Source

%d bloggers like this: