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Financial Questions & Answers

Financial Questions & Answers

Question:

My wife and I live on limited income from Social Security and a part time job. Social Security was $16,000 and part-time income was $6,000 (no federal tax withheld). Must we file, and if so, how? Numbers are rounded and no deductions. Thank you. -Ross

Answer:

We’ve been getting a lot of tax calculation questions which, unfortunately, we just can’t answer. However, your question actually falls into the realm of what we can answer without upsetting our compliance office!

If we assume things are just as you explained and that you have no other income and file jointly, then none of your Social Security would be included as taxable income. This is because half of your Social Security, plus all other income, is less than the $32,000 threshold. That gives you gross income of $6,000. If you look at page seven of the 2011 1040 instructions, you’ll find the detailed information about your question. For most folks who are married, filing jointly gross income would have to at least exceed $19,000 before they were required to file. So, on the surface it would seem you need not file. However, if you would have had federal tax withheld or if you are entitled to a tax credit of one type or another, you’ll want to file. The IRS Volunteer Income Tax Assistance program offers free tax help for folks who make $50,000 or less. So if you’re still scratching your head, call 800-906-9887 to find a site near you.