In general Social Security Income, referred to as SSI benefits, are federally tax-exempt. However, there are some instances in which SSI can be taxed. These instances are all related to having a substantial income exceeding set caps. However, in no circumstances are you responsible for paying taxes on all of your social security income.

In regards to cases where paying income tax on benefits, it’s important to assess a few personal things about yourself. Do you have supplemental income coming from investments? Are you employed? What about other forms of taxable income?

Well, if you answered yes to any of the previous questions, there is a chance that you could owe taxes on part of your social security benefits. Before a determination is made, there is another consideration – do you file taxes as an individual, or do you pay married filing jointly. Your filing status has a huge bearing on your requirements of paying income tax on SSI.

For those who file taxes as individuals making less than $24,999 annually, no income tax on Social Security Income is due. Between $25,000 and $33,999, you may find yourself liable for paying income tax on up to fifty percent of your SSI benefits. And for individuals with higher income above this amount, there may be an obligation to the Internal Revenue Service to pay tax on up to eighty-five percent of benefits.

For the purposes of making a determination of combined income for married filing jointly, you should take each spouse’s adjusted gross income, non-taxable interest, and half of all SSI and add them up. This amount is what your combined income is considered by the IRS for tax purposes.

If you are married filing separately, chances are good you’ll pay taxes on your benefits. But for the vast majority of married couples who file jointly, the following rules generally apply: If your combined income from interest, stock attrition, and employment and other forms of taxable income is less than $32,000, you are not responsible for paying income taxes on your social security benefits.

For married couples with a combined income over $44,000, up to eighty-five percent of SSI may be taxable. For those who fall in the middle of the two ranges up to fifty-percent of benefits may be taxable.

After figuring out where you lie on social security income taxability, you should refer to the form SSA-1099 that the IRS sends you for free each January. This is the document that is usually 4 pages long, and folded in half with light green typing. It’s a form that looks a lot more like a flyer and details the amount of benefits you accrued the preceding year. This form will contain a lot of useful information around tax time regarding the taxability of your benefits.

If after assessing your filing status and taxable income you determine that your SSI benefits are taxable, you should refer to the IRS website to look up documentation that applies to the category that you fall under. You should also either make the decision to pay quarterly estimated tax payments to the IRS, have federal taxes withheld, or be willing and able to incur your full SSI benefit income tax obligation during tax time.

If there are other areas of concern regarding paying taxes on social security income benefits, you should refer to the IRS either by mail if you have several weeks to months to wait on an answer, or a financial specialist. Additionally, you can refer to the IRS website at irs.gov to read up on publication #915. It is entitled “Social Security and Equivalent Railroad Retirement Benefits”