Filing taxes is a confusing and sometimes stressful process for many people. To ensure that they file properly, many people seek assistance with their taxes.
Whether people are filing themselves or getting help, it is important to understand the aspects that affect their taxes. For those who receive Social Security benefits, there are a few important details to be aware of. For additional answers, it may be beneficial to consult with a local tax attorney.
It is important that people file their back payments correctly. Though they may receive the back payments at one time, those payments are not all for that year. Filers should file amendments to their previous years’ returns and report them in the correct year. This will not only show their filings as correct, but will also reduce the amount of income reporting, which can help to limit or eliminate any taxes due.
Rare taxable payments
Generally, those who receive Social Security disability benefits rely on the payments as their only or main source of income, and do not make a large amount of money. Therefore, recipients do not usually owe taxes. However, some people and couples meet certain criteria and have to pay a portion of taxes. In short, single filers who report more than $25,000 per year and joint filers who report more than $32,000 per year will owe taxes on a portion of their income. Depending upon the income level, the percentage of income they must pay on may vary, but it never extends to more than 85 percent of the filers’ income.
For those benefit recipients who know that they will owe taxes, it may be a good idea to have the SSA withhold a portion of their benefits. This will help to reduce or eliminate the amount that they owe at the end of the year. To put withholdings in place, recipients must complete a withholdings agreement.