If you have turned full retirement age and are receiving your retirement and also still working full time, how does this effect your taxes?
This is a pretty common scenario these days – and a popular question!
Once you reach retirement age, whether your Social Security payments are taxable depends on your filing status and how much other income you receive. Check your federal form SSA-1099 for the total of your benefits. Once you have that number, here are a few key points:
If your only source of income is Social Security benefits, your benefits are generally not taxable.
If you received income from other sources, your benefits will not be taxed unless your modified adjusted gross income (MAGI) is more than the base amount for your filing status. Whether that income is taxable is based on a formula. The quick and dirty version of the formula is to add one-half of the total Social Security benefits you received (that’s what is reported on the form SSA-1099) to all your other income, including any tax exempt interest and other exclusions from income. Then, compare this total to the base amount for your filing status:
The base amounts (which are never adjusted for inflation) are:
•$32,000 for taxpayers who file as married filing jointly;
•$25,000 for taxpayers who file as single, head of household, qualifying widow/widower with a dependent child, or married filing separately who did not live with their spouses at any time during the year; and
•$0 for married persons filing separately who lived together during the year.
If the total is more than your base amount, some of your benefits may be taxable.