Do Retirees Still Need to Pay Income Tax?
Today is Tax Day – the deadline to file and pay your federal income taxes. Tax Day is typically April 15th, but it was extended this year due to the pandemic.
You may think that if you are retired, and no earning a paycheck, then you no longer need to pay income tax. But that’s not the case. According to TurboTax, in addition to actual wages, the IRS considers money from interest and dividends, capital gains, and winnings from gambling or the lottery to be taxable income – along with Social Security benefits.
Not everyone needs to pay income tax on their Social Security benefits. Your Social Security Benefit Statement, which you should receive each January, is used to determine whether you need to pay income tax or not. Generally speaking, if your total income is less than $25,000 as an individual or $32,000 as a couple, then you do not need to pay income tax on your benefits. But, even if you do have to pay taxes, only 50 to 85 percent of your benefits are taxable. It depends upon your combined income and marital status.
The Seniors Trust is committed to looking after the financial well-being of America’s retirees. It wants Congress to pass the Social Security Expansion Act, which would increase monthly benefit payments, establish a more fair cost-of-living adjustment, and shore up the long-term solvency of our country’s Social Security Program.
