Social Security benefits are not exempt from Federal income tax. This is true for both Social Security retirement and disability benefits. SSI benefits however, are not taxable. Whether or not you have to pay income taxes on these benefits depends on your total income for the year. For most people who receive Social Security benefits as their only source of income they will not have to pay federal taxes on this amount. Other income sources you will have to consider include any other pension you may be receiving along with wages you earn from employment.
Generally for tax year 2005, if you are single and under the age of 65, and your income is less than $13,005 you are not required to file personal income tax. If you are over the age of 65 and your income is under $17,435 you are not required to file personal income tax.
If you are married the amounts will vary if you are filing jointly or individually.
Generally, if you are filling together and both of you are under the age of 65, the limit is $26,170. If you are over the age 65 and filing together, the limit is $34,870. There may be other conditions that have to be met in order to be eligible for exempt filing status. To be certain whether or not you have to file your personal income tax based on Social Security benefits and any other income you received, contact the IRS at 1-800-829-1040.
Social Security sends out form 1099 statements throughout the month of January each year. You will need the amounts on this form to determine your filing status and to file taxes each year. If you have not received this document by February 1st contact Social Security at 1-800-772-1213 for a duplicate.