Taxes and SSI

Taxable Income

As mentioned above, to determine whether or not you must pay income taxes on your SSI benefits, you must look at all sources of income you have. Add the annual amounts of all types of income you receive to see if it exceeds the limits set by the IRS. As of 2011, if your total annual income exceeds $25,000 per year, the IRS requires you to include your SSI benefits in your taxable income when you pay taxes. If you are married, the IRS requires you to include your SSI benefits in your taxable income if both incomes together exceed $32,000 per year.

If you do have to pay income taxes on your benefits, you must know how much of your benefits is actually taxable. The income limits that determine what portion of your benefits is taxable varies depending on your filing status. According to IRS, as of 2011, if you file your tax return as a single individual and your annual income is anywhere between $25,000 and $34,000, you must only consider 50 percent of your SSI benefits when you pay your income tax. If you earn more than $34,000 per year, then you consider 85 percent of your benefits to pay income tax.

If you file as a married individual, then the income limits that determine how much you pay increase compared to what you would pay when filing as a single individual. As of 2011, if your total income for the year is anywhere between $32,000 and $44,000, you only need to consider 50 percent of your benefits when you pay income tax. If you earn more than $44,000 per year, you consider 85 of your benefits when you pay income tax. The other part of your benefits (whether the other 50 or 15 percent) is not taxable.

When you apply for your SSI benefits, you can ask the Social Security office to withhold income taxes from your benefits. To do so, you must request and fill out a W4-V form. When you fill out this form, you must specify the percentage of your benefits you want the Social Security office to withhold. You can choose to withhold 7, 10, 15 or 25 percent of your monthly benefits in taxes. If you owe more than the amount you choose to withhold, you will need to pay the difference at the end of the tax year.