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Many taxpayers incorrectly believe that their Social Security is not taxable because they have reached a certain age. There is no federal Social Security exclusion for age. Some taxpayers have to pay federal income taxes on their Social Security benefits. This usually happens if there is other substantial income (such as wages, self-employment income, interest, dividends, or other taxable income that must be reported) in addition to Social Security benefits. |
What Is Provisional Income?
To determine if Social Security benefits are taxable provisional income must be calculated. For purposes of Social Security, provisional income is 1/2 of a taxpayers social security, plus income from all other sources.
If provisional income is in excess of the applicable base amount for the taxpayer, then their Social Security will be taxable. It is important to note that if using the MFS status, and the taxpayer lived with their spouse during the tax year, 85% of their benefits are taxed and the base amounts do not apply.
The Base Amounts Are:
$25,000: For single, head of household, and qualifying surviving spouse, marry filing separately taxpayers who lived apart from their spouse all year
$32,000: For Married Filing Jointly taxpayers
How Is Social Security Taxed?
Social Security benefits are never 100% taxable.
Up to 50% of benefits can be taxable if income is $25,000 to $34,000 for an (individual) or $32,000 to $44,000 (MFJ)
Up to 85% benefits can be taxable if income is $34,000 (individual) or $44,000 (MFJ)
Sample SSA-1099 Calculation:
For example, if you have a taxpayer that is 65, single, and has the following income:
$10,000 (1099-R)
$2,000 (W-2)
$20 (1099-INT)
$16,000 (SSA-1099)
Begin by calculating provisional income.
$10,000 (1099-R) + $2,000 (W-2) + $20 (1099-INT) + $8,000 (half of SSA-1099)=$20,020
Compare provisional income ($20,020) to the base amount ($25,000 single).
Since the provisional income is below the base amount, none of the social security is taxable.
How Do I View the Taxable Portion of Social Security Benefits on a Tax Return?
Navigate to Form 1040 using the
Attached Forms Tree.
The taxable portion of Social Security benefits is displayed on Line 6b
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If a taxpayers address has changed they need to notify the IRS, to ensure they receive any tax refunds, or IRS correspondence. |
When Filing A Tax Return
If a taxpayer changes their address before filing a return the IRS will update their records based on the new address entered on the tax return.
Form 8822
If the address change occurs after the tax return has been filed a Form 8822 should be completed. Form 8822 can be completed in the tax software or the customer can access Form 8822 on http://IRS.gov . Form 8822 should be completed, signed, and mailed to the designated address.
Where To Mail Form 8822
Individual income tax filers should mail Form 8822 to the address based on the chart below:
Alabama, Arkansas, | Department of the Treasury |
Florida, Louisiana, | Department of the |
Alaska, Arizona, California, | Department of the |
A foreign country, | Department of the |
Guam: | Department of |
Virgin Islands: | V.I. Bureau of |
How Long Does It Take The IRS To Process An Address Change?
It can take four to six weeks for a change of address request to be fully processed.