Thank you all for sharing your experiences! Here is some additional context from my reporting that might be helpful, along with a few thoughts.
From the SS Administration: Some people who get Social Security must pay federal income taxes on their benefits. You must pay taxes on your benefits if you file a federal tax return as an “individual” and your “combined income” exceeds $25,000.
I agree with @maria.rose, that income limit for a single person is crazy. It’s only $34,000 for married couples living together, which is also really low, especially if the other spouse is still working.
But what exactly counts towards that income cap, or as the Social Security Administration calls it, “combined income”?
As according to the SSA itself:
Your adjusted gross income
- Nontaxable interest
- ½ of your Social Security benefits
= Your “combined income”
If Social Security is your only source of income, nope you don’t have to pay taxes on your benefits.
But half of the income you receive from Social Security retirement or disability benefits does count as part of this weird government equation to calculate whether you’re required to pay taxes on your benefits.
Take home message: If you earn additional income outside SS over $25,000 as a single person or $32,000 as a married couple, you may have to pay taxes on your Social Security benefits.
Side note: SSI benefits are never taxable.
Finally, this is a really good resource from SSA: https://www.ssa.gov/benefits/r…t/planner/taxes.html