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

The Internal Revenue offers tax help with it’s online tool designed to answer your tax questions. The Interactive Tax Assistant (ITA) is a tax law resource that takes you through a series of questions and provides you with responses to tax law questions.

You have three options to get your tax questions answered using the tool. You can (1) enter your search term or tax question in the ITA Search Box (2) select the Popular Topics link or (3) select Category. Next, simply answer the questions and follow the directions to progress throughout the interview.

Be advised you will need to gather your tax information such as income amounts, taxes owed and credit you’re claiming. However, the tax assistant tool does not require sensitive personal information such as your Social Security Number.

The tax help provided by the ITA tool covers a limited number of topics. If the tool does not cover your search term or tax question, you MAY be sent to the IRS’s tax trails application or the IRS’s query results page.

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Be on the alert for potential IRS email scams during tax season. The fact is, the IRS does not initiate communication with taxpayers through e-mail. So, be on the lookout for email claiming to be from the IRS or other government agencies.

These IRS email scams appear to be from the IRS and other government agencies stating more than one tax return was filed for you, or one that indicates you received wages from an employer unknown to you.

Also be on the lookout for another IRS email scam that claims you’re entitled to a tax credit. The Making Work Pay email scam features an IRS logo and promises money as part of the federal government’s economic stimulus package.

Here are some red flags that an e-mail is a scam?

• The IRS communicates to taxpayers via physical mail – NEVER by Internet or e-mail.
• Never-ever respond to email requests for personal information such as social security numbers, credit card or bank information.
• Threatening language – the IRS will not threaten you.
• Poor grammar or misspellings are a sure give-away. That’s usually a hint it is coming from overseas.

What are the consequences of having your Social Security Number stolen?
If your Social Security number is stolen, it may be used by another individual to get a job. That person’s employer would report income earned to the IRS using your Social Security number, making it appear that you did not report all of your income on your tax return.

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