are social security benefits considered taxable income?
In this situation, the part of your benefits that your employer paid is earned income -- which means it's taxable. If the employer paid 70 percent of the premiums, for example, 70 percent of your benefits would be earned income that you'd have to report on your tax return. Provisional income is defined by the Internal Revenue Service (IRS) as the sum of wages, taxable and nontaxable interest, dividends, pensions, self-employment and other taxable income plus half (50 percent) of your annual Social Security benefits. Examples of payments or services we do not count as income for the SSI program include but are not limited to: the first $20 of most income received in a month; the first $65 of earnings and one–half of earnings over $65 received in a month; the value of Supplemental Nutrition Assistance Program (food stamps) received; If you get benefits from a disability insurance policy, the IRS classifies your payments based on who paid the insurance premiums. If you paid the whole cost of the premiums out of your pocket, as with a private policy, your benefits aren't considered earned income. For single taxpayers, 50 percent of Social Security benefits may become taxable when their provisional income exceeds $25,000. For single retirees with provisional income over $34,000, up to 85 percent of Social Security benefits may be taxable. Government Benefits. Social Security disability benefits aren't earned income, and neither are military disability benefits. They are unearned income. In addition, most people receiving Social Security and military disability won't have to pay taxes on their benefits unless they have a lot income from other sources. In that case, some of your disability benefits may get eaten up by taxes. If your total Social Security and Taxes. combined income is greater than $44,000, then up to 85 percent of your benefit may be taxable.For married taxpayers filing separately who have lived together at any time during the tax year, limits are zero ($0). This means that for such taxpayers, up to 85 percent of their Social Security benefits may be taxable. Social Security is a safety net for the middle class and a lifeline for millions more. For more than 60 percent of Americans age 65 and over, it provides over 50 percent of their retirement income, and it is a guaranteed life-long source of retirement security that keeps pace with inflation and income growth. income set aside under a Plan to Achieve Self–Support (PASS). See the SSI Spotlight on Plan to Achieve Self–Support; earnings up to $1,780 per month to a maximum of $7,180 per year (effective January 2015) for a student under age 22. See the SSI Spotlight on Student Earned Income Exclusion; the cost of impairment–related work expenses for items or services that a disabled person needs in order to work. Earned Income is wages, net earnings from self–employment, certain royalties, honoraria, and sheltered workshop payments. Unearned Income is all income that is not earned, such as Social Security benefits, pensions, State disability payments, unemployment benefits, interest income, and cash from friends and relatives.
No