Billion Photos, Getty Images Signature, en.elcierredigital.com The latest from SSA and US government unsettles many: all of America on edge
If you are not clear about which incomes are taxable in the United States, you should consult this SSA tool
The Social Security Administration (SSA) and the US Government have issued statements about non-taxable income and its relation to the IRS. It is essential to understand which income is subject to taxes and which is not, to avoid errors in filing and potential penalties.
The SSA has reminded that not all Social Security benefits are subject to taxes. If your combined income (half of your SS benefits plus other income) exceeds certain thresholds, a portion of your benefits may be taxable.
Important message from the US SSA: how to know which income is taxable
For example, if you file individually and your combined income exceeds $25,000, up to 50% of your benefits could be subject to taxes. If they exceed $34,000, up to 85% could be taxable.
To help taxpayers understand which income is taxable and which is not, the IRS publishes Publication 525. This document details what types of income should be considered taxable or non-taxable when filing tax returns. For example, wages, salaries, tips, and other similar income are taxable, while medical care benefits, inheritances, and gifts generally are not.
This is vital to avoid errors in tax filing
It is important to note that some income, such as child support payments and certain disability benefits, are not subject to taxes. However, other income, such as pensions, investment interest, and self-employment income, is taxable.
Understanding these differences is crucial to avoid errors in tax filing and to make the most of available tax benefits. For US taxpayers, knowing this information is mandatory. An accurate filing not only avoids issues with the IRS but also ensures that all available deductions and tax credits are utilized.
IRS Publication 525 is a key tool
Additionally, keeping detailed records and consulting with a tax professional can be very helpful in navigating the complexities of the tax system. The recent communication from the SSA and the US Government underscores the importance of being well-informed about taxable and non-taxable income.
IRS Publication 525 is an essential tool for understanding these differences and ensuring compliance with tax obligations. By staying informed and seeking advice when necessary, taxpayers can avoid confusion and ensure that their tax returns are accurate and complete.
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