Do I have to pay taxes on SSA Benefits
If you have to file a federal tax return each year, and are employed / currently filling taxes; then you will have to pay taxes on any social security benefits you receive. Less than 1/3 pays taxes on social security. Social security is considered to be supplemental income, but many seniors choose to live on it permanently, so social security benefits are considered to be taxable income, contrary to popular belief that it isn’t.
If you have worked in the United States, you are most likely familiar with the form W-2 that you receive from the federal government each year. This is the form that details how much money in wages you have earned from your job, and thus is used to determine how much in taxes you will pay while filing tax returns. SSA 1099 is similar to this, as it reports to you how much money in social security benefits you have received.
SSA form 1099 is mailed by the SSA in early January, much like with W2 forms. This should give you plenty of time to file your taxes with the IRS so that you do not end up being subject to penalties.
You can also have the government withhold money from your SSA benefits for use toward income taxes – from 5% up to 25%. However, you must also be warned that you will be subject to penalties if you draw your full social security benefits while working. Therefore, you must be careful with how you use your social security benefits so that you do not end up being penalized by the IRS.