 Income tax 2021, 2022, software examples, social security benefits, get ready to get refunds to the max, dive it into income tax 2021, 2022. Here we are in our lesser tax software. You don't need access to tax software to follow along. However, you might want to have the form 1040, which you can find on the IRS website at irs.gov, irs.gov. Our starting scenario is going to be our single filer, Adam Smith, living in Beverly Hills, 90210, and instead of having the W-2 income, we're going to say that there's going to be that starting 100,000 from the pensions. We're going to say that they're past the working years at this point in time that therefore we're going to have the increase in terms of the standard deduction here. So it's at the 14-250 instead of the 12-5-50, which we can mirror on our worksheet by saying it's going to be equal to the standard deduction, plus we have this adjustment for the 1,007, bringing it up to the 14-250. That gives us a taxable income of the 85-750, 85-750 here, the tax then being calculated on page two, which is going to be that 14-619, so we got the 14-619, 14-619 on page two. So now let's imagine that we've got a 1099 for the Social Security that we're receiving pretty straightforward for the data input for it, and so we're going to go on down here in line six and we're going to say, okay, data input, Social Security for the taxpayer, obviously if they were married, we could have the spouse as well with the benefits. Let's put it in at like 6,000 on the benefits here. So I'm going to bring it back on over to the forum, and you can see on 6A, we've got the 6,000, and on 6B, we've got the 5,100. Now that, of course, because they have the other income, which is high, 100,000, they're getting taxed at the max of the Social Security benefits, which is 85%. So we're taking, in other words, the 5100 divided by the 6,000, we're at the 85%. So if we were to see that then on the tax worksheet, we can mirror that and say we got the income from Social Security, I'm going to add this then to my worksheet over here for the other income items on the first page of the Form 1040. I'm going to add some room, I'm going to put some cells above this one, selecting these cells and right click and insert. I'm going to call this Social Security, and then underneath that I'm going to give a little bit of room because you might have, you know, at least the married couple could have had two things that would be involved there. I'll leave a little bit more room just because I don't know exactly why. And then we're going to have this here. Now you could calculate it to estimate the calculation at, it was what did I say, 6,000 times the 0.85, and then sum it up in the total down here, total, and just basically have that 85% in mind. You can make your formula a little bit more fancy. You might put the max up here at the 0.85. Obviously, if they're not at the max, then you might be a little bit more dependent on the software to do the calculation unless you want to basically, you know, double check that calculation in the event that it's under the max in your Excel worksheet and get a little detail in there. We'll talk more about that in a second. I'm going to delete some of these added rows, deleting them. And then if I sum it up, I'm going to pull the sum down to add my other cells. So we're at the 105, 100. If I go back to the first tab, then we've got the 105, 100. Now also note when you do that data input, it might be nice to actually have two columns here to put the 6,000 in and then multiply times the 85% or whatever percent so that you can then tie it out to the forms, the 1099. If you were to double check it or review it at some later point, you want to make it as transparent as possible so that you can kind of confirm what you're doing. That's going to be the idea. But we're at the 105, 100. Going back to the first tab, there it is, the 105, 100. Standard deduction at the 14, 250. We've got the taxable income at the 90,850. 90,850 matching the bottom line taxable income on the tax return. Page two, also note that I am looking at the form 10, 40. Although I'm assuming they're in the retirement years and that's why we had that added deduction. So you might be using the 10, 40 SR in that event. But the 10, 40 is the format we're used to seeing this items in. So there's the 15, 831. So here's the 15, 831. 15, 831 will depend on the software to do that calculation. So if we go back on over so fairly straightforward, if they were married, then you could have two of the two items that would be involved. Now let's just take a look at adjusting this income level, which will adjust the threshold and we can look at the calculation and how they're determining the calculation. So let's go back on over and I'm going to adjust their income. And let's say this, not that income, we're going to go to the pension income. Let's bring this down to like 20,000. If we go to 20,000, back on over to the forms. And now we've got something less than the 85%. Hold on a second. It's still saying 100,000. I wanted to make the taxable amount 20,002. Both sides 20,000. Okay. So there we have it. So now you can see the, because we lowered the income, it's now, none of it's being taxable. So it's just a reporting item on 6A. Now you could get into the worksheet here and try to basically think about where the thresholds are for how much is going to be taxable and the amount that will be taxable. But typically when you're talking to people, it's useful to say, well, up to 85%, it's going to be taxable as your income goes up in general as a general rule. Let's just adjust the income a little bit. Let's bring it up a bit here. And it's a fairly low threshold. If I bring it up to 25%, for example, now you've got the 6,000 total. I didn't change the social security, just the income from other sources, the pension to the 25. And now you've got 1,500 of it that is going to be taxable. So fairly low other income threshold that starts to be taxable. If we move it up then to 30,000 and 30,000 and go back on over, now we've got half of it being taxable here at the 6,000, the social security, half of it being taxable. We bring it up to 40, let's say 40,000, 40,000 and go back on over to the forms. And now we've got the 6,000 and the 1,005. And that's at the 5,100 divided by the 6,000, the 85% again. So that's why in general, the general answer would be, well, is social security benefits taxable? Well, if your income is lower, then it's not all gonna be taxable and you might have none of it taxable. But if fairly low threshold, if your income goes up, then it's gonna be taxed at the cap of the 85%. And again, if you wanted to dive into a more detail, you could take a look at the detail of the worksheets to determine a more detail about those thresholds here. So that's the general idea with the social security.