Boston.Com Article; IRA distributions and taxable Social Security benefits

 IRA distributions and taxable Social Security benefits

Posted by Andrew Chan
February 9, 2011 03:00 PM
Is the income I receive from my IRA distribution included in the calculation to determine how much of my social security benefits will be taxed?

Generally, yes! If the IRA distribution you receive is taxable and not a return of your previous non-deductible contributions, it will be included as part of your Adjusted Gross Income (AGI) on your tax return. The amount of your social security benefits that is taxable is determined by calculating your "combined income". Your "combined income" equals your AGI + your nontaxable interest + 50% of your social security benefits.

If your IRA distribution is taxable (as described above), it should be included in your AGI and thus your "combined income" for purposes of determining what portion of your social security benefits are taxable.

If you know your federal tax filing status and your "combined income", you can use the following guidelines from the Social Security Administration to see how much of your benefits are taxable:

If you file a federal tax return as an "individual" and your "combined income" is:
- between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
- more than $34,000, up to 85 percent of your benefits may be taxable.

If file a joint return, and you and your spouse have a "combined income" that is:
- between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits.
- more than $44,000, up to 85 percent of your benefits may be taxable.

If you are married and file a separate tax return, you probably will pay taxes on your benefits.

For more information about calculating your "combined income" or the taxation of social security benefits visit the Social Security Administration's web site at www.ssa.gov.