As many New Jersey residents already know, April is the month to file your taxes or request an extension. If you have been thinking about seeking Supplemental Security Income (SSI) or already receive these benefits, you may be wondering how they may affect your taxes. Since many couples file their taxes together, it may not be clear how one or both spouses SSI benefits can affect tax filings. The short answer is that most people’s taxes will be affected by SSI benefits that they receive.
How this affects one’s tax liability is, of course, dependent upon personal financial situations. For example, many individuals over the age of 65 opt to receive SSI benefits. If this is the only income that a person or a couple receive, the income is not taxed. However, in many situations one spouse received SSI benefits and the other may receive regular taxable income which can make the tax situation not as clear.
Other income, like 401(k) distributions can be counted as income. So can dividends from assets, and of course a spouse’s income if you and your spouse file jointly. The amount of taxable income is determined by percentages, much like with regular taxable income. Generally, the more money there is, the more that is subject to taxa. However, there are ways to write off regular income that doesn’t qualify as taxable income.
When a person files for SSI benefits, he or she does not always count on the possibility that the income may not be 100% nontaxable income. Receiving SSI benefits can be a real blessing. Some people wouldn’t have any income without it. For those people who do not receive any other type of income, SSI benefits are not subject to federal income tax.