I'm a Senior. Will I Owe Social Security Taxes? (2024)
Ben Geier, CEPF®
·4 min read
Millions of older Americans live solely on a Social Security check. And while other Americans rely mostly on workplace retirement plans like a401(k) or an individual retirement account (IRA), these monthly benefits from the government can make or break your retirement.Let’s take a look at how your Social Security is taxed after age 70.
For more help figuring out how Social Security will fit into your personal retirement planning journey, consider working with a financial advisor.
Social Security, Defined
Social Security is a government program created in 1935 as a part of President Franklin Delano Roosevelt’s New Deal, a series of programs designed to fight the Great Depression. Social Security is considered by most people to be the cornerstone of America’s social safety net. Social Security sends monthly checks to Americans who have reached retirement age, currently set at 66.
The amount of money you get each month depends on how much money you earned during your career and how old you were when you retired. The program is funded by Social Security taxes taken out of each American worker’s paychecks. The average monthly check in 2022 is for $1,658, and the maximum check is for $3,345.
Social Security and Federal Taxes
Don't miss out on news that could impact your finances. Get news and tips to make smarter financial decisions with SmartAsset's semi-weekly email. It's 100% free and you can unsubscribe at any time. Sign up today.
Even though Social Security money comes directly from the federal government, some of it will be going back to Uncle Sam in the form of federal income taxes. Social Security is treated as regular income for the purpose of taxes. When it comes time to file for taxes, any money you earned – including Social Security, money from retirement plans, pension payments and anything you earn from working after you are technically retired – will be totaled up to determine your taxable income. You’ll then be slotted into a tax bracket and your tax burden calculated.
Is Social Security Taxable After Age 70?
Though there are some rumors on the internet that the government stops taxing Social Security payments once you reach a certain age, such as 70, this is simply not true. Social Security payments are taxable from the moment you start receiving them until you die.
Social Security and State Taxes
Some of the confusion over the tax status of Social Security payments likely comes from the fact that each state treats Social Security differently.Many states treat Social Security the same way the federal government does, taxing every dollar of it based on the bracket you slot into with your full retirement income. This means that your Social Security check will be taxed twice – once by the federal government and once by your state.
Other states only partially tax Social Security. They might only tax 50% of it, or have some other formula for determining exactly how much of your monthly check is subject to state taxes.
Finally, some states don’t tax Social Security at all. For some of these states it is a special carveout, and for others it is simply because there is no state income tax, so none of your retirement income will be subject to any state tax.
Bottom Line
Yes, Social Security is taxed federally after the age of 70. If you get a Social Security check, it will always be part of your taxable income, regardless of your age. There is some variation at the state level, though, so make sure to check the laws for the state where you live.
A financial advisor can help you keep inline with all retirement tax rules. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
You will pay federal income taxes on your benefits if your combined income (50% of your benefit amount plus any other earned income) exceeds $25,000/year filing individually or $32,000/year filing jointly. You can pay the IRS directly or have taxes withheld from your payment.
Generally, your Social Security benefits are taxed when your income is more than $25,000 per year, including income from investments held in retirement accounts like traditional 401(k)s and IRAs. If Social Security is your only source of income, you likely won't pay any tax on those payments.
You aren't required to pay the Social Security tax on any income beyond the Social Security wage base limit. In 2024, this limit rises to $168,600, up from the 2023 limit of $160,200. As a result, in 2024 you'll pay no more than $10,453 ($168,600 x 6.2%) in Social Security taxes.
Taxes aren't determined by age, so you will never age out of paying taxes. Basically, if you're 65 or older, you have to file a return for tax year 2023 (which is due in 2024) if your gross income is $15,700 or higher. If you're married filing jointly and both 65 or older, that amount is $30,700.
Yes, Social Security is taxed federally after the age of 70. If you get a Social Security check, it will always be part of your taxable income, regardless of your age.
If you are 65 or older and blind, the extra standard deduction is: $3,700 if you are single or filing as head of household. $3,000 per qualifying individual if you are married, filing jointly or separately.
As long as you continue to work, even if you are receiving benefits, you will continue to pay Social Security taxes on your earnings. However, we will check your record every year to see whether the additional earnings you had will increase your monthly benefit.
If you don't pay into the system when you work, then you can't collect the income benefits later in life. And for many older Americans who haven't saved enough on their own for retirement, Social Security may be the only money they have to rely on.
Yes, you can get excess Social Security tax refunded. The procedure depends on whether the excess withholdings were caused by multiple employers exceeding the maximum or too much being withheld by a single employer. Select your situation for more info.
Have you heard about the Social Security $16,728 yearly bonus? There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.
However, the double-taxation of Social Security benefits can occur at the state level. A grand total of 38 states don't tax Social Security benefits. But if you live in one of the 12 states that do tax Social Security benefits, and earn above the preset income thresholds in those states, double taxation can occur.
If you work for an employer, you and your employer each pay a 6.2% Social Security tax on up to $168,600 of your earnings. Each must also pay a 1.45% Medicare tax on all earnings. If you're self-employed, you pay the combined employee and employer amount.
How much can you earn and still get benefits? later, then your full retirement age for retirement insurance benefits is 67. If you work, and are at full retirement age or older, you may keep all of your benefits, no matter how much you earn.
If you are 65 or older and blind, the extra standard deduction is: $3,700 if you are single or filing as head of household. $3,000 per qualifying individual if you are married, filing jointly or separately.
Have you heard about the Social Security $16,728 yearly bonus? There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.
Address: Suite 228 919 Deana Ford, Lake Meridithberg, NE 60017-4257
Phone: +2613987384138
Job: Chief Retail Officer
Hobby: Tai chi, Dowsing, Poi, Letterboxing, Watching movies, Video gaming, Singing
Introduction: My name is Zonia Mosciski DO, I am a enchanting, joyous, lovely, successful, hilarious, tender, outstanding person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.
