Social Security Recipients: Don’t Lose a 2024 Tax Refund by Making a Simple Mistake
Seniors who file for Social Security retirement benefits might think they have finally left income taxes behind, but that’s not necessarily the case. If you’re a Social Security recipient, you could owe personal income taxes on your benefits if you also earn outside income that puts you above a certain income level. Additionally, even if you don’t owe income taxes, it might be a mistake not to file a return because you could miss out on a refund.
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As previously reported by GOBankingRates, if Social Security benefits were your only income for the year, then your benefits are usually not taxable and you probably don’t need to file a federal income tax return. However, if you received Social Security benefits plus other income, your tax obligation depends on how much you earned.
You must pay taxes on your Social Security benefits if you file a federal tax return as an individual and your combined income exceeds $25,000 a year. If you file a joint return, you must pay taxes if you and your spouse have a combined income of more than $32,000. If you are married and file a separate return, you probably will have to pay taxes on your benefits, according to the Social Security Administration.
If you don’t owe any taxes you might decide to skip filing a return altogether. But that could be a bad move, according to Kevin Thompson, a certified financial planner and the founder and CEO of 9i Capital Group.
“The need to do their taxes is paramount because most of them have to pay quarterly tax,” Thompson told Newsweek in a recent interview. “You do not want to be subject to interest in penalties, so making sure you are in good standing with the IRS is pivotal.”
Not filing a return also means you might miss out on some extra money. For example, if you had any tax withheld during the year — either from Social Security payments themselves or from any other sources, such as quarterly estimated tax payments or carried-over refunds from prior years — you should file a return. In many cases you’ll get most, if not all, of those taxes back in a refund.
“If federal income tax was withheld from your Social Security benefits or other sources of income, filing a tax return is the only way to receive a refund of the overpaid taxes,” Zack Hellman, owner of Tax Prep Tech, told Newsweek.
Refunds typically go to seniors who have part-time jobs and a low level of Social Security income each month, Newsweek reported.
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In addition, certain Social Security recipients also qualify for tax credits such as the Earned Income Tax Credit or Additional Child Tax Credit, which you can only receive by filing a tax return.
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This article originally appeared on GOBankingRates.com: Social Security Recipients: Don’t Lose a 2024 Tax Refund by Making a Simple Mistake
