Every application for social security benefits requires the consideration of a substantial list of issues over the life of a case. It’s one matter to apply for and receive benefits, but it’s another to understand what happens after this occurs over the long road ahead. The Sullivan Law Office provides over forty years of experience and can represent and assist you throughout the entire process in many kinds of disability cases, including Social Security Disability, long-term disability, short-term disability, state retirement and workers’ compensation. Today’s blog deals with the taxation of social security benefits by federal and Kentucky state law.
For most people, social security benefits are not taxable. This is true whether or not they have income in addition to their benefits. If you and/or a spouse have another source of substantial income, there is some likelihood that your benefits could be taxed at the federal level. Note that a taxpayer never pays tax on more than 85% of social security benefits.
The starting point in making any type of calculation of possible tax is determining the taxpayer’s “combined income,” which is defined as adjusted gross income plus nontaxable interest and ½ of social security benefits. If filing as an individual and combined income is between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits. If combined income is more than $34,000, up to 85 percent of your benefits may be taxable.
For taxpayers that file a joint return, if both you and/or a spouse have combined income that is between $32,000 and $44,000, up to 50 percent of your benefits may be taxable. If combined income is more than $44,000, you may have to pay income tax on up to 85 percent of your benefits. Taxpayers that are married and file a separate tax return will probably pay some amount of tax on benefits.
If you are subject to tax on social security benefits, they would be taxed at whatever your resulting tax rate is based upon level of taxable income. While some states tax social security benefits, the State of Kentucky imposes no state income tax on such benefits. Note that Social Security has no authority to withhold state or local taxes from a taxpayer.
Are you ready to fight for your benefits with a lawyer that is dedicated to helping you get results? If so, it is time to contact Sullivan Law Office today. We offer free consultations, so you have absolutely nothing to lose! Call 888-587-0228 or visit us online. We look forward to hearing from you.