Do Social Security Recipients Have to File Taxes?

Do You Pay Taxes on Social Security?

Seniors whose only source of income is Social Security do not have to file income tax returns. This is an interesting quirk of the U.S. tax code, which allows older citizens to exempt their Social Security payments from their gross income.

Social Security is one of the most widely used benefits programs in the United States. In 2023, more than 67 million citizens get at least part of their monthly income from Social Security's pension benefits. This is more than 1 out of every 6 citizens. Social Security pays retirement benefits to more that 45 million Americans, as well as survivor benefits, disability payments and other supports for millions more. 

How Social Security Works

The Social Security Administration (SSA) provides much-needed benefits for tens of millions of American citizens. For many people, Social Security is the sole or main source of financial support.

In 2023, the average Social Security retirement pension beneficiary receives $1,825 a month, while the average disability payment recipient gets $1,483 a month.

Millions of Americans also get survivor benefits through the SSA as a result of their qualifying dependent relationship with a current or former Social Security beneficiary.

Social Security benefits from all sources are generally paid on a monthly basis, with either direct deposit or paper checks delivered to all recipients in the country. Unlike some government benefits, such as SNAP, Social Security benefits are not earmarked for any particular purpose, but may be saved, invested and spent like any other form of income.

Tax Filing Requirements in the United States

Most American workers are accustomed to filing an annual tax return. The Internal Revenue Service (IRS) generally requires wage earners to report their annual income on a 1040 or 1040EZ form.

Other workers, such as self-employed or freelance workers, may file a 1099 form, which permits the reporting of non-traditional sources of income such as investments, all-cash businesses or gambling winnings.

Citizens and non-citizens alike are expected to report and pay appropriate taxes on income from all sources, if the gross amount exceeds the standard deduction for single taxpayers. In 2023, this amount was set at $12,950. People whose gross income does not exceed this amount, and whose filing status is Single, may not have to file a return with the IRS.

Some people, such as the self-employed, have special circumstances that require them to always file a return, regardless of their gross annual income.

Social Security Benefits and Taxes

The quirk that protects millions of Social Security beneficiaries from normal taxation lies in the requirement that taxpayers report gross income, rather than all income. For the purposes of the IRS, Social Security benefits are not counted as gross income, which exempts the majority of recipients from having to file a 1040 or 1099 form each year.

If a payee's only income for a calendar year comes from Social Security, the entire amount is effectively invisible to the IRS for filing purposes.

Other Retirement Income

This is not a universal exemption, but only a helpful classification for one type of retirement income. Any income derived from other sources can be treated as taxable gross income, and is thus subject to reporting rules.

Many seniors, for instance, get some kind of private pension, such as a retirement benefit from their employer or investments, that can be counted as gross income on their taxes.

For filers in the Single category whose gross income from all non-SSA sources is less than $12,950, the normal filing exemption may still apply. Any gross income above this threshold, or income earned by people with Married, Married Filing Separately or Head of Household, may still trigger a requirement to file. Self-employed seniors, who may combine Social Security benefits with income from their business, are also likely to fall under the normal reporting requirements. 

Tax laws in the United States are complicated, and everyone's finances are unique.

Before you make a decision that could affect your filing status with the IRS, be sure to talk with a certified financial planner or enrolled agent with the IRS. The professional advice these experts can offer for your specific situation may prevent an unwitting violation of the tax code, and they may help you find legal ways to minimize the burden of filing and paying your taxes each year.