When you turn 62, you become eligible for collecting your Social Security benefits. These benefits become taxable by the Internal Revenue Service (IRS), but the amounts differ depending on how much additional income you are earning.
If you rely on Social Security benefits alone, however, you do not have to worry about paying for your federal income taxes. Should you have other sources of income, the IRS has a certain threshold for determining the tax on your Social Security benefits.
The threshold stipulates that you need to add half of your Social Security benefits together with your other source of income. If the resulting amount exceeds this threshold, you should consider your Social Security benefits as taxable. Most recently, seniors had to file tax returns if their gross income was $14,050.
As a senior, you may be able to lessen how much taxes you have to pay for your taxable income. The IRS has a tax break called Credit for the Elderly or the Disabled, which gives you an opportunity to reduce how much they have to pay in income tax through their allowable credit.
Navigating the world of Social Security and taxes can be very daunting, so you can have a look at some of our previous articles to get you started. Contact Senior Strong today for more information!