Double, double toil and trouble; fire burn and cauldron bubble.” That’s what the witches in Shakespeare’s Macbeth chant. Taxpayers could “get burned” if they earn more than the IRS threshold for Social Security benefit taxation. Exceed a specified amount in wages or other income and you may owe income taxes on part of those social security benefits.
Let’s take a look at the rules and the math.
Who Is Taxed?
As explained by the Social Security Administration, if your “combined income” (defined below) in 2020 is greater than the following amounts, you may be taxed on up to 85 percent of your social security benefits:
File as “individual” (single) and your combined income is between $25,000 and $34,000: you may have to pay income tax on up to 50 percent of your benefits. If you earn more than $34,000, up to 85 percent of your social security benefits may be taxable.
File a joint return, and you and your spouse have a combined income that is between $32,000 and $44,000: you may have to pay income tax on up to 50 percent of your benefits, If you earn more than $44,000, up to 85 percent of your social security benefits may be taxable.
File as married filing separately: you probably will pay taxes on your benefit