If you collect Social Security benefits in Missouri, your tax situation is unique. Yes, Missouri is one of the 13 states with some amount of tax on Social Security benefits. Missouri has something of a hybrid taxation policy when it comes to Social Security benefits.
So, how does Missouri's policy for state income tax mix with your obligation for federal taxes owed to the IRS? Take a look at what you need to know about Missouri's policy on deductions for Social Security benefits.
Read More: Social Security Tax & Pensions
Social Security and Retirement Taxes in Missouri
Missouri has been slowly reducing the taxation of retirement and Social Security benefits since 2007. However, it's still not a tax-free state for retirees. Here's a look at the basics:
- Income from Social Security benefits is partially taxed.
- Income from public pensions is partially taxed.
- Income from private pensions is fully taxed.
- Withdrawals from retirement accounts are fully taxed.
- You may be able to claim a deduction on your Missouri return for the taxable portion of your Social Security income listed on your federal return.
If you receive Social Security income in Missouri, you may be exempt from taxes if your adjusted gross income is less than $85,000 when filing as single. That number bumps up to $100,000 for married filing jointly. If you're over the age of 62, you can also qualify for a Social Security deduction. The same is true if you're disabled.
Partial exemptions are available for taxpayers over the age of 62 who don't qualify for full exemptions based on income thresholds alone.
Read More: What Percentage of Income is Income Tax?
Federal Income Tax on Social Security Benefits in Missouri
The Internal Revenue Service (IRS) has its own rules for Social Security benefits. Up to 85 percent of your benefits may be taxed if you make more than $34,000 in combined income from all sources when filing as single. Up to 50 percent of your Social Security benefits may be taxed if your combined income is between $25,000 and $34,000.
For a joint return, a combined income that lands between $32,000 and $44,000 could mean that you'll be taxed on 50 percent of your benefits. If the total is above $44,000, you may be taxed on up to 85 percent of your benefits.
Read More: Do Taxes on Social Security Change After Age 70?
How to Calculate Federal Taxes for Social Security in Missouri
If you receive Social Security benefits, you should receive something called a Social Security Benefit Statement (Form SSA-1099) every January. This form will show you exactly what you received in benefits during the previous tax year. When completing your federal tax return this year, refer to this document to determine which portion of your benefits will be subject to taxes.
Generally, you won't owe federal income taxes on Social Security in Missouri if your only source of income is your Social Security income. However, there's a good chance that you will need to pay taxes on at least a portion of your Social Security benefits if you receive income from other sources.
If you're concerned about keeping up with what you owe in taxes on Social Security benefits, the IRS allows you to make estimated quarterly payments that are similar to the payments made by self-employed people. You can also opt to have federal taxes removed before you receive your payouts.
- Missouri Department of Revenue: Am I Eligible?
- Social Security Administration: Income Taxes And Your Social Security Benefit
- Social Security Administration. "Retirement Benefits," Page 2. Accessed Feb. 19, 2020.
- Internal Revenue Service. "Publication 554: Tax Guide for Seniors," Page 12. Accessed Feb. 19, 2020.
- AARP. "Which States Tax Social Security Benefits?" Accessed Feb. 19, 2020.
- Iowa Legislature. "Senate File 2408 - Enrolled." Accessed Feb. 19, 2020.
- New Mexico Taxation and Revenue Department. "Does New Mexico offer a tax break to retirees?" Accessed Feb. 19, 2020.
Adam Luehrs is a writer during the day and a voracious reader at night. He focuses mostly on finance writing and has a passion for real estate, credit card deals, and investing.