Are Social Security benefits taxable?

SOCIAL Security benefits are given to the elderly to support them in retirement, and disabled Americans to help with extra living costs.

To qualify for the payments, individuals must have worked and paid into Social Security for a certain amount of time.

The amount you receive is based on your earnings history, the year you were born, and when you start to claim Social Security.

Nearly nine out of 10 individuals aged 65 and older receive Social Security benefits, and they make up around 33% of the income of the elderly.

We explain whether you are taxed or not on those benefits.

Are Social Security benefits taxable?

Yes, some households have to pay federal income taxes on their Social Security benefits.

This usually happens if you have other substantial earnings on top of your benefits - for example, wages, self-employed earnings, interest, dividends, or other taxable income.

How much you have to pay depends on your other earnings - we explain different scenarios below:

File a federal tax return as an "individual" and your income is:

• Between $25,000 and $34,000, you may have to pay income tax on up to 50% of your benefits.
• More than $34,000, up to 85% of your 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% of your benefits.
• More than $44,000, up to 85% of your benefits may be taxable.

If you are married and file a separate tax return, you'll probably pay taxes on your benefits, according to the Social Security Administration.

But Social Security has an Old-Age, Survivors, and Disability Insurance (OASDI) program to limit the amount of earnings subject to taxation.

Meanwhile, retirees who have little income other than Social Security won't be taxed on their benefits.

Supplemental Security Income (SSI) payments are different from Social Security benefits, and they're not taxable.

How to find out if you have to pay tax

Each January, you should get a Social Security benefit statement (form SSA-1099) showing the amount of benefits you received in the previous year.

You can use this benefit statement when you complete your federal income tax return to find out if your welfare payments are subject to tax.

If you haven't received it, or if you've misplaced it, you can order a new one by using your online Social Security account.

To get a replacement form, simply select the "Replacement Documents" tab and follow the instructions.

If you do have to pay taxes on your Social Security benefits, you can make quarterly estimated tax payments to the IRS.

Alternatively, you may choose to have federal taxes withheld from your benefits when you first apply.

You can have either 7%, 10%, 12%, or 22% of your monthly benefit withheld for taxes.

We explain 20 ways to live comfortably off your Social Security checks.

We also explain which states don't tax Social Security benefits.