Social Security Recipients: Why You Might Need to File Taxes This Tax Day?

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Do you need to file a tax return if you receive Social Security benefits? While most people who receive Social Security checks don’t have to pay taxes on their benefits, there is a significant group who do. According to the Social Security Administration, around 40% of Social Security recipients are required to pay taxes on their benefits.

In August, the Social Security Administration paid over $121.4 billion to almost 68.1 million beneficiaries, as reported by the Congressional Research Service. Since 1984, those receiving Social Security benefits have had to pay taxes if their income exceeds a specific threshold. This threshold depends on various factors, such as age, marital status, and additional income earned beyond Social Security payments.

Even if you’re one of the many who don’t need to file taxes on your benefits, it could still be worth considering, as you may be entitled to a refund or qualify for valuable tax credits. In this article, we’ll explain how you can determine if you need to file taxes in 2024 and why filing might still be beneficial.

How to Determine If Your Social Security Benefits Are Taxable

To figure out whether you need to pay taxes on your Social Security benefits, you’ll need to assess your total income. Specifically, you need to check if half of your Social Security benefits, combined with any other income you may have, exceeds the base amount for your filing status.

Here’s a breakdown of the base amounts based on your filing status:

• $25,000 if you’re single, head of household, or a qualifying surviving spouse.
• $25,000 if you’re married, filing separately, and lived apart from your spouse all year.
• $32,000 if you’re married and filing jointly.
• $0 if you’re married and filing separately but lived with your spouse at any point during the year.

If you have other sources of income, such as wages from a job, self-employment income, or interest and dividends, these need to be added to your total income to determine if you exceed the base amount for your filing status.

If your total income exceeds the threshold, you will be required to pay federal income taxes. You can also arrange to have taxes withheld from your monthly Social Security payments so that you won’t owe a large amount at tax time.

When Do You Need to File a Tax Return for 2024?

Here are a few key scenarios in which you will need to file a tax return for the 2024 tax year:

• If you’re an unmarried senior (65 or older) and your gross income exceeds $14,700.
• If you’re married and filing jointly, and both spouses are at least 65 years old, and your combined gross income exceeds $28,700.
• If you’re married and filing jointly, and one spouse is under 65 and the other is 65 or older, and your combined gross income exceeds $27,300.

Another way to determine if you need to file taxes is by looking at your combined income. Combined income is your adjusted gross income, non-taxable interest, and half of your Social Security benefits.

For single filers:

• If your combined income is between $25,000 and $34,000, up to 50% of your benefits may be taxable.
• If your combined income is more than $34,000, up to 85% of your benefits may be taxable.

For married couples filing jointly:

• If your combined income is between $32,000 and $44,000, up to 50% of your benefits may be taxable.
• If your combined income exceeds $44,000, up to 85% of your benefits may be taxable.

Should You File Even If You’re Not Required?

Even if you’re not required to file taxes, there are still several reasons why you might want to consider it.

First, you might be eligible for a refund. If you’ve had taxes withheld from your Social Security benefits or made estimated tax payments, you may be entitled to a refund of any overpaid taxes. If you don’t file, you may be missing out on money that’s rightfully yours.

Second, you could be eligible for tax credits, such as the earned income tax credit (EITC), child tax credit, or child and dependent tax credit. The EITC is particularly beneficial because it is fully refundable, meaning you could get a refund even if you don’t owe taxes.

How to Find Your Social Security Benefit Amount

To find out exactly how much you’ve received in Social Security benefits, the Social Security Administration sends out a benefit statement each year. This statement shows the total benefits you received during the previous year. If you don’t receive the statement in the mail or lose it, you can easily find this information on your My Social Security account online.

For more detailed guidance, be sure to review the four ways you could lose your Social Security benefits and learn about the potential increases to your payments in 2025 when the cost-of-living adjustment (COLA) goes into effect.

Conclusion

Tax season can be complicated, especially for Social Security recipients. Even if you’re not required to file taxes, it may be worth doing so to ensure you’re not leaving money on the table. Whether it’s a refund or valuable tax credits, filing could result in financial benefits. Understanding your Social Security benefits and how they fit into your overall income is key to making the right decision this tax season.

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