Is Social Security Taxed? Here's What You Need to Know

If you’re already drawing Social Security — or if you plan to start doing so in the near future — you might be wondering: Is Social Security taxed?

Tax experts say it’s an important question, especially because many Baby Boomers who are currently receiving Social Security benefits are also still in the workforce and earning income. The answer is not that simple: Social Security benefits are taxed for some people, but not others.

“Social Security taxation is complicated, but not as complicated as Social Security itself,” said Gil Charney, director at The Tax Institute at H&R Block. “Taxpayers’ Social Security benefits are not taxable until their income reaches a certain level, which depends on your filing status.”

If you currently draw income from a retirement account or pension, you could have to pay taxes on some of your Social Security benefits. Another reason you might find that your Social Security is taxed is if you’re also still working — even if it’s a part-time job, gig economy work like driving for Uber or working as a self-employed consultant.

“To see if your Social Security will be taxed, you have to look at your combined income and your marital status,” said Lisa Greene-Lewis, tax expert for TurboTax. “Typically, Social Security won’t be taxed unless you receive additional income.”

For taxpayers wondering, is Social Security taxed, there’s a formula you can use. “The IRS provides a quick way to find out if you must pay taxes on your Social Security benefits,” said Mark Jaeger, director of tax development at TaxAct. To find out your “combined income” for purposes of calculating Social Security taxes, add your adjusted gross income, any nontaxable interest you earned over the course of the year, and half of your Social Security benefits.

The gist is that if you’re single with combined income above $25,000, or married filing jointly with combined income of more than $32,000, you can expect to pay taxes on half your Social Security benefits. But if you’re single and your combined income is more than $34,000, or more than $44,000 if you’re married and filing jointly, you could see up to 85% of your Social Security benefits taxed.

For anyone using tax prep software like TurboTax to do your taxes, the program will automatically figure out if and how much of your Social Security income will be taxed.

The good news is that no more than 85% of your Social Security benefits will be taxed. Still, tax pros say it’s good to keep those income thresholds in mind if you plan to keep working in retirement. Depending on your situation, it could be wise to consider delaying Social Security or retirement plan distributions.

If you do owe taxes on Social Security, the Social Security Administration says you can either make quarterly payments or have them automatically withheld from your Social Security benefits.

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