Social Security: 3 Reasons Why It’s Worth Filing Your Taxes in 2024
Written by
Vance Cariaga
Edited by
Daria Uhlig
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Nobody really likes filing income taxes — especially if you’re under no obligation to. That’s the case with many seniors. If your only income for the year came from Social Security benefits, then your benefits are usually not taxable and you probably don’t need to file a federal income tax return.
Technically, deciding whether you should file federal income taxes as a Social Security recipient largely depends on whether you earned outside income for the year, and how much. But even if you aren’t required to file a return, doing so can still pay off. Here are three reasons why it’s worth filing your taxes in 2024
You Owe the IRS Taxes
Social Security benefits are taxed based on provisional income and designated income thresholds. The more income you earn, the more you will have to pay in taxes. Provisional income is determined by adding the combined total of half of your Social Security benefits, your tax-exempt interest and other non-Social Security items, such as jobs or investments, that make up your adjusted gross income.
For single tax filers, Social Security benefits aren’t taxed if your provisional income is less than $25,000. That rises to $32,000 if you’re married and filing a joint return. Up to half of your Social Security benefits might be taxable if your provisional income is $25,000 to $34,000 for single filers, or $32,000 to $44,000 for joint filers. Anything above those income levels, then up to 85% of your benefits could be taxable.
Failing to file an income tax return when you owe taxes can lead to penalties.
You’ll Get a Refund
This might happen if you had any tax withheld during the year, either from the Social Security payments themselves or other sources, such as quarterly estimated tax payments or carried-over refunds from prior years. By filing your return in 2024, most, if not all, of those taxes will come back in a refund.
You Can Earn a Tax Credit
Certain Social Security recipients qualify for tax credits such as the Earned Income Tax Credit or Additional Child Tax Credit. You’ll only get these if you file a federal tax return.
Another thing to keep in mind is that you might owe state income taxes on Social Security benefits, depending on where you live. In 2024, 10 states still impose state taxes on benefits: Colorado, Connecticut, Kansas, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont and West Virginia.
Each state has provisions that could provide deductions for individuals below certain thresholds or ages. Deductions and exemptions vary from state to state, so if you live in one of the above states, check with your state tax authority to learn more.
More From GOBankingRates
