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Quick Tax Season Q&A for Those Receiving Benefits from the Social Security Administration

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Q:  Do I need to pay federal income taxes on monies that I received throughout the year from the SSA?

A:  Maybe.  If you file as an “individual” and your combined income exceeds $25,000.00, or if you and your spouse file a joint return and your combined income exceeds $32,000.00, then you will need to pay federal taxes on a portion of those benefits.

Q:  Am I taxed on the whole amount that I received?

A:  No.  If you file as an “individual” and your combined income for the year is between $25,000.00 and $34,000.00, you are likely only going to be taxed on up to 50% of the total benefits.  However, if your combined income exceeds $34,000.00 for the year, then you may be looking at paying taxes on up to 85% of the benefits. If you file jointly with your spouse and your combined income is between $32,000.00 and $44,000.00, then you will likely pay taxes on 50% of the benefit income.  If you file jointly and the combined income of you and your spouse is more than $44,000.00 then you will likely pay taxes on up to 85% of the benefits.

Q:  How does my income from Social Security benefits factor into my overall combined income?

A:  Your adjusted gross income is added to the non-taxable interest earned.  From there, you add ½ of your Social Security benefits to achieve your total combined income.

Q:  How do I know how much I have received in benefits from the Social Security Administration for the year?

A:  In January of each year, the SSA will send you a 1099 to show the total amount paid during the previous year.

Q:  What if I lost my 1099 or if I moved abroad?

A:  You can create an online account by visiting the Social Security Administration’s website.  Once the account is created and you are logged on, you can utilize the tab “Replacement Documents” to print out copies of any documents that you have misplaced or that you never received.

Q:  Can I choose to have taxes withheld from my benefits to avoid paying a large amount at tax time?

A:  Yes!  You can submit form W-4V online.  This is a voluntary withholding request that gets filed with the IRS.  It can be modified or changed at a later date, if needed.  Or, if you prefer, you can contact the IRS at 800-829-3676 and ask for assistance in setting up voluntary withholding.

Q:  I need help!  Who can help me?

A:  A knowledgeable CPA and Christina Miller and Associates, of course!

Tax Credits for the Disabled

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Tax Credits for the disabled - Miller Disability FirmHappy New Year!  As the 2017 holiday season officially comes to a close, we find ourselves entering the first phase of 2018, which for most of us is tax season!  I like to get my taxes done nice and early, so we are knee deep in tax preparations here at the firm.  I get a lot of questions regarding taxes as they pertain to state, federal and private disability benefits.  Generally speaking, I direct client’s to their tax professionals, however there is one exciting tax credit that I do want to make folks aware of.

If you are a single or married retiree or a disabled person whose federal Social Security benefits make up 90% or more of your income, then you are likely eligible for a wonderful tax credit known as the “Credit for the Elderly or the Disabled”.  You must have turned 65 (or be older) by the end of 2017, or have been found disabled by the Social Security Administration before the end of 2017.  In addition, there are strict income limits to qualify for this credit that involve calculations concerning your adjusted gross income for 2017 and the total of your nontaxable Social Security benefits, pensions, etc.  You must meet both requirements to qualify for the credit.

If you have limited income and think you may qualify for this credit, definitely speak to your tax professional and ask about it.  You can claim a maximum of $3,750.00 to $7,500.00 depending upon your filing status, so  it is definitely worth checking into. If you do not have a tax professional, you can contact the IRS directly and ask them to calculate the credit for you.

Wishing everyone a seamless and painless tax season!