Do you have to pay income tax on Social Security or pension checks?

Question

This is assuming you retire at age 62.

Answer 1

Pensions are fully taxable unless the employee paid in his own money to the fund instead of the company, or along with the company.  If he is getting his own money back, that is not taxable.  But most pensions are funded by the employer so they are fully taxable.

Social Security benefits can be taxable depending on the recipient's other income.  The formula works like this.  Add all of your income except Soc Sec together and then add on half of the Soc Sec benefits.  If that number comes to over $25K for a single person or $32K for a married couple, the Soc Sec benefits are going to be taxed.  Only 15% of the benefit is taxed if you are barely over the $25/32K limit, but are 85% taxed if you are way over.

Answer 2

There is a form in the income tax books where you figure out if your social security and pension checks are taxable.  Above a certain amount----you pay income tax on them.