Some individuals receiving Social Security benefits must pay federal income
taxes. The tax is computed only if you have substantial income. That income
can include wages from work, self employment, interest dividends and other
income. It is important to note that no one pays taxes on more than 85
percent of their Social Security benefits.
If you file an individual federal tax return, you must pay taxes on some
portion of your benefits if your combined income exceeds $25,000. If you
file a joint return, you must pay taxes if you and your spouse have combined
income of more than $32,000. If you are married and file a separate return,
you probably will have to pay taxes on your benefits. You can read more
about tax preparation relating to Social Security benefits at www.socialsecurity.gov/planners/taxes.htm.
Social Security benefits include retirement, survivor and disability benefits.
Those individuals who only receive Supplemental Security Income (SSI)
payments do not have to worry about paying federal taxes as SSI benefits
are not taxable.