Q & A
WILL YOU HAVE TO PAY TAX ON SOCIAL SECURITY BENEFITS?
Answer: Some people are under the misconception that Social Security benefits are always free from federal income tax. However, depending on how much income you have from other sources, you may have to report up to 85 percent of your benefits as income on Form 1040 and pay the resulting federal income tax.
First, you’re taxed during your working years when you have to pay federal income taxes on Social Security tax amounts that are taken out of your salary or self-employment earnings.If this happens, you’re effectively getting taxed twice on the same dollars:
- Then, you’re taxed again if you have to pay federal income tax on Social Security benefits. (Depending on where you live, you may have to pay state income taxes too.)
This article explains the two steps needed to find out if your Social Security benefits will be taxed. Read more…
Source: Echelbarger, Himebaugh, Tamm & Co., P.C. (EHTC.com) - November 2, 2014
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