Chapter 34Special Tax Rules for Senior Citizens
All of your Social Security benefits are tax free if your “provisional income,” explained in 34.3, is $25,000 or less if you are single, or $32,000 or less if you are married and file a joint return. No more than 50% of your benefits are subject to tax if you file a joint return and your provisional income is over $32,000 but no more than $44,000, or if you are single and your provisional income is over $25,000 but no more than $34,000. When provisional income exceeds $34,000 or $44,000 (depending on your filing status), more than 50%, but no more than 85%, of your benefits are subject to tax. If you are married and filing separately, and did not live apart for the whole year, you must apply the 85% rate without considering the base amounts. If you are married filing separately and you lived apart the entire year, are a head of household, or are a qualifying widow/widower, use the $25,000 and $34,000 base amounts for single persons.
If you are receiving Social Security benefits but continue to earn wages or self-employed income, you must pay FICA taxes or self-employment tax on that income regardless of your age.
If you are on Medicare, be sure you understand the impact of adjusted gross income on your premiums (34.10).
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