Taxation of Social Security Benefits: What Retirees Need to Know for the 2023 Filing Season

Atlanta, Georgia – As of the beginning of 2024, over 53 million Americans aged 65 and above were receiving retirement benefits from the Social Security Administration (SSA). These monthly payments are a crucial form of federal financial support for senior citizens. However, many retirees are uncertain about how these payments are taxed.

As tax season gets underway, there is confusion among filers regarding whether seniors who receive Social Security payments need to file a tax return. While there are tax credits and benefits that could allow for a refund, most senior citizens do need to file taxes every year.

It is important to note that there is no age at which you no longer have to submit a tax return, and senior citizens are subject to the same tax requirements as other adults. However, if Social Security is your sole source of income, it is not taxable. This applies to both spouses if they file jointly. Additionally, if your taxable income is below $14,250 (or $28,700 for married couples), you will not be liable to pay income tax on those earnings and will not be required to file a tax return.

Since 1983, Social Security payments have been subject to taxation if the recipient’s earnings exceed a certain threshold. Even the highest earners on Social Security will not be taxed on the entire amount they receive. The maximum taxable amount is 85 percent of the total Social Security benefit received. To be taxed on your Social Security benefits, you must have a gross income of at least $25,000 if you’re an individual or $32,000 if you’re a couple filing jointly. If you earn more than that, you may see up to 85% of your benefits payments subject to tax.

During tax season, all Social Security recipients will receive a Social Security Benefit Statement (Form SSA-1099) that details the full amount of benefits received in 2022. This statement can be used to calculate a recipient’s liability for the current tax season.

In conclusion, it is essential for senior citizens to understand how their Social Security benefits are taxed and whether they need to file a tax return. The various thresholds and exemptions can have a significant impact on the tax obligations of retirees, and being informed about these matters can help them make well-informed decisions during tax season.