HOW SOCIAL SECURITY BENEFITS ARE TAXED
Provisional income (PI) is the product of a formula used for no other purpose than figuring out the taxable percentage of social security benefits. To compute your provisional income, total your adjusted gross income, any tax-exempt interest or similar nontaxable revenue, and one-half of your social security retirement benefits for the year. How much of your benefits are taxed depends on this “base amount.”
– Joint filers with PI below $32,000 ($25,000 for single filers) owe no tax on benefits.
– Joint filers with PI between $32,000 and $44,000 ($25,000 and $34,000 for single filers) are taxed on a sliding scale that tops out at 50% of benefits received.
– Joint filers with PI over $44,000 ($34,000 for single filers) are taxed on more than 50% and up to 85% of benefits.
Note that supplemental security income payments (SSI) are not taxable. For answers to questions about your benefits, contact us at (303) 447-1626 to ensure that you are meeting all the record keeping requirements in these areas.