Question

Changes to Taxable Social Security Income

Forum|Forum|5 years ago
February 12, 2021
1 reply
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My 2020 taxable social security income has reduced greatly from 2019 for my Federal tax return. Was there a major change on how they calculate taxable social security?

SteamTrain

Employee

Nope...remains essentially unchanged.

You may not have taken out $$ from your 401k or IRA account this year ...or if you did, you may have returned some of the $$.

OF course, if you haven't entered every scrap of your income yet, the final taxable SS may not be accurate ..YET.. Especially tax-exempt $..tahose have to be entered too and DO affect taxable SS.

as quick check is to look at your 2019 1040, lines 7b +2a........ vs 2020 1040 lines 9 +2a. IF the 2020 value is lower, then yeah, taxable SS could be lower (Note: this is just a very "Rough" check, and not totally accurate)

All this assumes you've entered every scrap of your 2020 income correctly already.

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

S

sayunt1Author

Thank you. You were correct that my IRA withdrawals were much less this year, but why would that make a difference to social security taxable income?

SteamTrain

Employee

IRA distributions are usually fully-taxable income....it adds in to the calculation like any other income you have.....

.... distributions from ROTH IRAs won't though, nor will transfers from an IRA that doesn't go thru your hands, but goes directly from the IRA to a charity after you reach age 70.5 (a QCD, or qualified charitable distribution)

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*