It pays to keep up with your tax obligations, even in retirement.
disabled retrieval arm. image by mdb from Fotolia.com
You do not file taxes if Social Security benefits are your only income. However, if you have other forms of income, there’s a possibility you owe taxes on your Social Security disability benefits. Depending on how much income you have, more than half of your Social Security benefit amount could be subject to taxes.
What Income Can Be Taxed?
Even if you receive Social Security benefits, you will have to file a tax return and pay taxes if you have outside income from different sources. These income sources include work wages, self employment earnings, and dividends from life insurance policies and investments. You must also file taxes if you receive nontaxable interest, such as earnings from tax-exempt mutual funds.
How Much Do I Pay In Taxes?
You pay taxes on
your Social Security disability benefits if it’s determined that your total income -- the combination of your outside income and Social Security benefits -- exceeds the Social Security Administration’s income guidelines. As of 2012, if your combined income tops $25,000 per year, 50 percent of your Social Security disability benefits are taxed at normal income tax rates. If your total income surpasses $34,000, up to 85 percent of your Social Security benefits are taxed.
Does The Income Limit Increase If I’m Married?
The income limits to determine the taxability of your Social Security disability benefits increase if you’re married and filing jointly. For example, if you and your spouse’s combined incomes, which include outside income and Social Security benefits, top $32,000, then 50 percent of your Social Security benefits are taxed. Up to 85 percent of your Social Security benefits are taxed if your combined incomes exceed $44,000.
How Do I File My Tax Returns?