Some states tax Social Security benefits, but California is not one of them. Included in these non-taxable benefits are survivor's and disability benefits. However, just because there is not a California Social Security tax does not mean that you cannot be taxed at the federal level. Depending on the amount of income you receive from other sources, you can be taxed up to 85 percent of your benefits by the IRS. However, single filers with less than $25,000 in combined income, and joint filers with less than $34,000 combined income, will not owe any taxes on Social Security benefits.
Tips
California does not tax Social Security benefits on the state level. However, individuals withdrawing Social Security benefits may still be required to pay federal taxes on them.
Finding Information About Federal Taxes
For tax purposes, the IRS considers your Social Security benefits as taxable income, but not everyone must pay taxes on these benefits. Whether you will have to file taxes on your retirement benefits is determined by a set of income thresholds and rules issued by the IRS. Usually, people who have to pay taxes on their benefits also have other qualifying income in addition to their retirement benefits. Some qualifying sources of other income can be wages from a job or self-employment, interest and dividends, or any other taxable income.
If you're filing as an individual with a combined income between $25,000 and $34,000, you may be taxed up to 50 percent of your benefits. Single filers earning more than $34,000 a year in taxable income may have up to 85 percent of their Social Security benefits taxed. Joint filers with a combined income between $32,000 and $44,000 might be taxed up to 50 percent of their benefits, while those with more than $44,000 in combined income may be taxed up to 85 percent. Also, filers who are married filing separately can likely expect to have their Social Security benefits taxed at some level. To determine your combined income, simply take your adjusted gross income, plus half of your Social Security benefits, plus nontaxable interest.
Looking At Determining Factors
Workers over the age of 18 can find out how much in Social Security benefits they are entitled to by going to the Social Security Administration's website and using the online Retirement Estimator to request a Social Security statement. The Social Security Administration stopped mailing anyone under the age of 60 paper statements in 2017, so going online and creating an account at ssa.gov/myaccount/ is the only way to check your statement if you're under 60.
Your benefits are determined by your lifetime earnings. These earnings are adjusted to consider changes in average wages over the 35 years you've earned the most income. The Social Security Administration then applies a formula to these earnings to figure your basic benefits. These benefits are what you receive when you reach the full retirement age of 65 or older, depending on when you were born.
Obtaining Information About Benefits Disbursements
Certain factors can increase or decrease the amount of California retirement benefits you receive. If you choose to start receiving benefits before you reach full retirement age, you will receive reduced benefits. Delaying retirement past the full retirement age (based on the year you were born) will increase your Social Security benefits by a certain percentage. Your benefits will increase either until you reach the age of 70, or you begin taking the benefits. Beginning at age 62, each year you can expect a cost-of-living increase added to your retirement benefits. You will receive this cost-of-living increase even if you don't take retirement benefits until you reach full retirement age, or up to age 70. Additionally, California is one of many states with no property tax after age 65, made possible through exemptions.
Reporting Requirements
You can use IRS Form 1040 to report your income, including income derived from Social Security benefits, for the previous year. If your income is solely derived from Social Security benefits, you may not be required to pay additional taxes.
Up to 50% or even 85% of your Social security benefits are taxable if your “provisional” or total income, as defined by tax law, is above a certain base amount. Your Social Security income may not be taxable at all if your total income is below the base amount.
If you’re married and filing jointly with your spouse, your combined incomes and social security benefits are used to figure your total income.
When Is Social Security Income Taxable?
To determine when Social Security income is taxable, you’ll first need to calculate your total income. Generally, the formula for total income for this purpose is: your adjusted gross income, including any nontaxable interest, plus half of your Social Security benefits.
If you’re married and filing jointly with your spouse, your combined incomes and social security benefits are used to figure your total income.
Then you’ll compare your total income with the base amounts for your filing status to find out how much of your Social Security income is taxable, if any.
You’ll see that you fall into one of three categories. If your total income is:
- Below the base amount, your Social Security benefits are not taxable.
- Between the base and maximum amount, your Social Security income is taxable up to 50%.
- Above the maximum amount, your Social Security benefits are taxable up to 85%.
How Much of Your Social Security Income is Taxable?
Review the list below to determine where your total income falls and how much of your Social Security income is taxable. For:
- Single, Head of Household or Qualifying Widow(er), the base amount is $25,000 and the maximum is $34,000.
- Married filing jointly, the base amount is $32,000 and the maximum is $44,000.
- Married filing separately, the base amount is $0 and the maximum is $0. (Note: married filing separate filers who lived apart the entire tax year use the same base and maximum amounts as single filers.)
Are All Kinds of Social Security Income Taxable?
All social security benefits are taxable in the same way. This is true whether they’re retirement, survivors, or disability benefits. Take note that Social Security benefits paid to a child under his or her Social Security number (SSN) could be potentially taxable to the child, not the parent. Note: Supplemental Security Income, or SSI, is a non-taxable needs-based federal benefit. It is not part of Social Security benefits and does not figure into the taxable benefit formula.