Social security is a legitimate program designed to help the Americans in their golden years. The question for many is whether the benefits they receive from the program as part of their taxable income to be processed? The answer is so often the case with tax questions is “Maybe.”
Social Security is often touted as a program to pay the public debt of the United States. This is fundamentally wrong. The program has actually brought more tax revenue than trillion, pays each. The problem is that the politicians in Washington passed a law the Social Security Administration to buy U.S. Treasuries with the excess money. As a result of social security, now the owner of billions of U.S. Treasuries and must start cashing them as the baby boom generation retires and starts drawing on the program. Predictably, the government has already spent the money on other programs.
Social Security is not broken. You will pay in the near future and that means people will continue to receive their benefits. So, those benefits taxed? The answer depends on your overall financial situation of the year. Come on, you had to know was will not be easy. The rules get a bit technical, but you can create a quick calculation must be done to find out the answer.
Calculate the total social security you paid for the year. Now divide that number by two. Then total up all other income you receive, whether taxable or not. Now merge the two tracks. If the numbers are greater than your basis, then the taxes should be paid.
You probably ask yourself what is a “base”. It is a random number that comes with the IRS. The figure was $ 32,000 for couples filing jointly in 2009. It was $ 25,000 for single and head of household filers. Curiously, the base amount for married couples who lived together, but separately $ 0. These figures have to change slightly every year.