You may have to pay federal income taxes on your Social Security benefits. This usually happens only if you have other substantial income (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return) in addition to Social Security benefits.
To determine the amount of Social Security or Railroad Retirement benefits that may be taxable, you must compare the base amount with the total of:
1) One-half of the benefits received, plus
2) All other income, including tax-exempt interest.
Other income is not reduced by any exclusions for:
- Interest from qualified U.S. Savings Bonds,
- Employer-provided adoption benefits,
- Foreign earned income or foreign housing, or
- Income earned by bona fide residents of American Samoa or Puerto Rico.
Read more: Taxable Social Security Benefits 2021