Are Spousal Social Security Benefits Taxable?

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Are Spousal Social Security Benefits Taxable?

Depending on your total household income for the year, spousal Social Security payments may be liable to federal income tax. By 2021, most persons receiving Social Security benefits will have to pay income tax on a percentage of their payments.

To see whether you owe tax, first calculate your total income base and then add half of your yearly Social Security payment to that amount. The tax on your Social Security spousal payments is in addition to any tax you owe on other income, such as salary from work, investment interest or dividends, and distributions from a typical 401(k) plan or individual retirement account (IRA).

Key Takeaways

  • Spouses of qualifying applicants might get a reduced benefit amount from Social Security.
  • Depending on your family income, spousal Social Security payments may be liable to federal income tax.
  • Social Security payouts are also taxed in several states.
  • If you are married and file jointly, you must include your spouse’s income in your computations, even if they do not get Social Security payments.

Individual Income Threshold

If you haven’t remarried and meet certain additional qualifications, you may be able to receive spousal benefits based on an ex-Social spouse’s Security employment record. In this situation, you would mark the “Single” filing status box on your Form 1040 income tax return, and your benefits would be taxed depending on your total income as follows:

  • If your total income is less than $25,000, your Social Security payments are tax-free.
  • If your total income is between $25,000 and $34,000, you may be required to pay taxes on up to 50% of your benefits.
  • If your income exceeds $34,000, you may be required to pay taxes on up to 85% of your benefits.
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Married Income Threshold

If you are married and filing jointly, you must include your spouse’s total income in your computations, even if your partner has delayed receiving Social Security payments in order to gain delayed retirement credits. In this case, your benefits would be taxed as follows:

  • You won’t have to pay taxes on your spousal benefits if your total taxable income is less than $32,000.
  • If your annual income is between $32,000 and $44,000, you must pay taxes on up to 50% of your benefits.
  • If your family income exceeds $44,000, you may be taxed on up to 85% of your benefits.

You will almost certainly have to pay taxes on a part of your benefits if you are married and file separately.

State Taxes on Social Security Benefits

As of 2021, the following 13 states tax Social Security payments in some way:

  • Colorado
  • Connecticut
  • Kansas
  • Minnesota
  • Missouri
  • Montana
  • Nebraska
  • New Mexico
  • North Dakota
  • Rhode Island
  • Utah
  • Vermont
  • West Virginia

Remember that whether or not a state taxes Social Security payments might vary over time. West Virginia, for example, is eliminating its tax on Social Security payments starting with the 2022 tax year. You may find the most recent guidelines on the website of your state’s tax agency.

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