- Whether or not you pay income tax on your Social Security depends on your total amount of income. If you file tax as an individual (married filing separately, head of household, single, widow) you will pay tax on your Social Security if your income is more than $25,000. If you file a joint return, you will have to pay tax on your Social Security if your total income is more than $32,000. Generally, you will not be required to file a return if your sole income is Social Security.
- Using your SSA-1099, complete Worksheet 1 in Publication 915 to determine what portion of your benefits are taxable. The worksheet is also available in the instructions for IRS forms 1040 and 1040A. Once you have calculated your taxable Social Security benefit amount, enter the total benefit amount on Line 20a of form 1040 or Line 14a of form 1040A. Enter the taxable benefit amount on Line 20b of form 1040 and Line 14b of form 1040A. If none of your benefits are taxable, enter "0" on lines 20b and 14b.
- Supplemental Security Income (SSI) is administered by Social Security but is paid from the general fund for the Department of the Treasury. The benefit is paid to low-income taxpayers who are over 65, blind or disabled and is intended to pay for necessities such as food, utilities and clothing. Unlike Social Security retirement benefits and Social Security disability, SSI is not subject to income tax. This means that you are not required to file a return if your only source of income is SSI. You are only required to file if your total income, minus SSI, meets the income requirement for your filing status.
- If you hired an attorney to help you attain your Social Security benefits, then you are entitled to deduct your legal costs on your tax return. You will deduct this expense as a miscellaneous item using Schedule A and enter the amount on form 1040, Line 23.
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