Social Security Benefits with w2 form

[rose323]

Good evening, I have a new client who is filing MFJ senior citizen and made 53k w2 and about 32k SSA statements. He brought his tax paperwork from his other preparer unfortunately she is really sick and can no longer help him 😟... I am entering all his information and he has a total of 88k for income. Which makes him pay. But I am looking at the prior tax preparation forms and the social security benefits are included yet they don't appear in the actual adjusted gross income. Is there something I need to do that I don't know about?

[rbynaker]

Was the income similar in the prior year?  If income was low enough, social security benefits are not taxable.

Also, check the name and SSN on the 1099-SSA, might they be for a minor child instead of your client?

Those are the two most common scenarios.

[rose323]

Income was about 45k w2 last year. So yes close.  Since it is not taxable do I still add to the return ? If so, how do I minus it out?

[rose323]

The social security is for him and the other another 9k is for his wife 

[rbynaker]

You enter it and the software will determine how much of it is taxable.

[rose323]

Really that means its considering most of it since it reduces his refund by 4k

[rbynaker · Accepted solution]

Yes, the phase-in window between 0% taxable and 85% taxable is very small (and has never been indexed for inflation).  Maybe not today 4/15, but after tax season you should spend some time going through the social security worksheet to see how this is calculated.  I'm sure your software produces something or you can look in Pub 915.

[Norman2001]

For MFJ, Social Security benefits start to be taxed when (Income + ½ SS benefits) = $32,000

85% of SS benefits are taxed when (Income + ½ SS benefits) >= $44,000

[qbteachmt]

"Really that means its considering most of it since it reduces his refund by 4k"

In other words, he doesn't owe More. That's good. It means the withholding is meeting the tax expectation.

There is nothing wrong with making so much money that you have to pay taxes.