Do you know if your Social Security benefits are subject to income tax? If you’re not sure, here are a few important tax facts that will help.

You should receive a Tax Form SSA-1099 that will show you the total amount of the Social Security benefits you received in 2010. Use the information on that form and these important tax facts to determine whether or not your benefits are taxable.

Important Social Security Tax Facts

1. The amount – if any – that are subject to income tax depends on your total income and marital status.
2. In most cases, if your only source of income for 2010 was Social Security, your benefits are not taxable and you probably do not need to file a federal income tax return.
3. If you received income from other sources, your benefits will not be taxed unless your modified adjusted gross income is more than the base amount for your filing status.
4. Your taxable benefits and modified adjusted gross income are figured on a worksheet in the Form 1040A or Form 1040 Instruction booklet.
   • First, add one-half of the total Social Security benefits you received 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. If the total is more than your base amount, some of your benefits may be taxable.

To determine whether some of your benefits are taxable use the following calculation:

5. The 2010 base amounts are:
   • $32,000 for married couples filing jointly.
   • $25,000 for single, head of household, qualifying widow/widower with a dependent child, or married individuals filing separately who did not live with their spouses at any time during the year.
   • $0 for married persons filing separately who lived together during the year.
6. For additional information on the taxability of Social Security benefits, see IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits

The tax facts are a valuable source for determining if your benefits are taxable.

For more income tax related facts and helpful tax tips, visit the IRS website.

source: irs.gov