Tax Day is fast approaching, so now is the time to get organized. 2022’s taxes are gearing up to be particularly complicated. If you receive Social Security, it’s vitally important that you brush up on your tax knowledge; understanding the system will help you save money by lowering your tax liability. Luckily, the Social Security Administration (SSA) makes it easy to get ahead, by offering helpful tax prep advice early.
Tax Prep Advice From the SSA
The tax prep advice boils down to three main points:
- Take Your Credit
- Know Your Annual Social Security Income
- Double Check Your Earning History
First, the SSA recommends tax credits like The Child Tax Credit (CTC) and The Earned Income Tax Credit (EITC). You can claim a credit if you meet the qualifications, even if you also claim Social Security benefits. These credits will not affect your benefit amount. The CTC is a tax-benefit that helps families with small children. The EITC provides aid to low-to-moderate income families. To claim both tax credits, you must file a federal tax return.
Next, know your annual Social Security income. You can do this by using the Benefit Statement offered by the SSA. The statement totals up your Social Security income from the previous year. Those earnings are reported to the IRS. Your benefit are taxed if you make a moderate income; it will never be taxed based off your yearly benefit total.
Finally, the last bit of tax prep advice is to review your earnings history. Your Social Security benefit is based off your earnings history. Under-reported earnings can mean a smaller benefit. You can use the SSA website to review your earnings history and see a personalized benefit estimate. That way, you can know exactly what to expect from your Social Security. The Council for Retirement Security is working to protect senior benefits, so we only need to worry about taxes and not the future of the Social Security program.
