For many retirees, Social Security is more than just a monthly payment—it’s a key part of their financial security. But when it comes to taxes, these benefits may not be as simple as they seem. Depending on how much additional income you have, your Social Security could be partially taxable. And if you’re not careful, missing a required tax filing could lead to penalties or even deductions from your monthly checks.
The IRS has specific income limits that decide whether your Social Security benefits are taxed. If Social Security is your only source of income, you likely don’t need to file a return. But if you also earn from a part-time job, pension, investments, or other retirement accounts, the picture changes. Understanding how the IRS calculates your combined income and what happens if you don’t file when you should is essential to avoiding surprises and protecting your retirement income.
When You May Not Need to File Taxes
If your only source of income is Social Security, chances are you don’t need to file a tax return. For 2024, the IRS says that:
- A single person aged 65 or older doesn’t need to file if their income is under $16,550.
- A married couple filing jointly, both age 65 or older, is safe under $32,300.
However, once you start receiving other income—like money from a pension, withdrawals from retirement plans like a 401(k), investment income, or even part-time work—your tax situation changes. That’s when Social Security benefits can become taxable.
What Is Combined Income and Why It Matters
The IRS uses a calculation called combined income to decide if any part of your Social Security benefits is taxable. The formula is:
Adjusted Gross Income (AGI) + Nontaxable Interest + 50% of Social Security Benefits
Once you know your combined income, compare it to the IRS thresholds to determine if you owe tax.
How Much of Your Social Security Can Be Taxed?
Here’s a quick look at when your Social Security benefits may become taxable based on your combined income:
| Filing Status | Combined Income | Taxable Portion |
|---|---|---|
| Single | $25,000 – $34,000 | Up to 50% of benefits |
| Single | Over $34,000 | Up to 85% of benefits |
| Married Filing Jointly | $32,000 – $44,000 | Up to 50% of benefits |
| Married Filing Jointly | Over $44,000 | Up to 85% of benefits |
| Married Filing Separately* | Any amount (if together) | Up to 85% of benefits |
*If you’re married and file separately while living with your spouse, your benefits are likely taxable.
Should You File Even If You’re Not Required?
In many cases, yes. Even if you’re not legally required to file a return, doing so could benefit you financially. For instance:
- If taxes were withheld from your pension or other income, filing may result in a refund.
- If you’re eligible for refundable tax credits like the Earned Income Credit or American Opportunity Credit, you won’t get them unless you file.
What Happens If You Skip Filing When Required?
Not filing taxes when you’re supposed to can lead to serious issues. Here’s what may happen:
- Interest starts building from the original due date—even if you got an extension.
- Late penalties can add 5% per month, up to a total of 25% of your unpaid taxes.
- The IRS can take up to 15% of your Social Security through a program called the Federal Payment Levy Program.
While they won’t take your entire check, even a small deduction can hurt when you’re on a fixed income.
How to Stay on Track With Taxes in Retirement
- Keep track of all your income—not just Social Security.
- If you expect to owe, consider adjusting your withholdings or making quarterly estimated payments.
- Use tax software or talk to a tax advisor who understands retirement income.
- Don’t ignore letters or notices from the IRS—they won’t disappear, and the longer you wait, the worse it can get.
If Social Security is your only income, you probably don’t have to file taxes. But as soon as you start earning from other sources, even a small amount, the tax rules change. Knowing your combined income and how it affects your benefits is key to avoiding penalties and keeping more money in your pocket. If you’re unsure, it’s always a good idea to get help from a tax expert and stay on the safe side. Filing might not only be a legal requirement—it could also help you get money back.
