Social Security and Equivalent Railroad Retirement Benefits
A taxpayer may receive Social Security benefits as a retiree, as a disabled person, or as a beneficiary. The benefits may be totally or partially tax free. Up to 50% or 85% of the total benefits may be taxable, depending on whether the taxpayer's other income exceeds certain base amounts.
Similar tax treatment applies to tier 1 Railroad Retirement benefits but not to tier 2 Railroad Retirement benefits (the discussion of which is beyond the scope of this book).
Social Security Benefits
Whether any benefits are taxable depends on the amount of benefits as well as other income, including tax-exempt interest, and the taxpayer's filing status. The age of the recipient has no bearing on whether the benefits are taxable. Thus, a taxpayer who starts ...