If you are disabled or retired, you may receive monthly benefits from Social Security. Although many people who receive Social Security benefits are living on a fixed income, these payments can still be taxable at the federal level and in some states. However, recipients of Social Security benefits won't owe any tax to the state of New York.
Federal Income Tax
Not all recipients of Social Security will pay tax on their benefits. You must count Social Security benefits as taxable income if you earn more than $25,000 as a single filer or $32,000 as a joint filer. If a portion of your benefits is subject to federal income tax, you must report them on Form 1040. If you are filing Form 1040A or the standard Form 1040, you must also report any Social Security benefits you receive that aren't taxable.
State Income Tax
New York is one of 36 states that do not impose any income tax on Social Security benefits. At the time of publication, the only states that do tax Social Security benefits are Vermont, Rhode Island, Connecticut, West Virginia, Missouri, Iowa, Minnesota, North Dakota, Nebraska, Kansas, Montana, Colorado, New Mexico and Utah.
New York Taxes
To complete your New York tax return, you must use your federal adjusted gross income, which will include any Social Security benefits you received that were federally taxable. Because New York doesn't impose tax on these benefits, you can eliminate them from your New York adjusted gross income by inputting the amount on line 27 of your New York tax return. You can then add them to your other New York subtractions and deduct them from your New York AGI on line 33.
New York also exempts Tier 1 railroad retirement benefits from income tax. If you paid tax on these benefits to the Internal Revenue Service, you must deduct them from your New York adjusted gross income when you file your state tax return. Social Security cannot withhold any federal income tax from your Social Security benefits. If you know that you will owe tax at the end of the year, you should make estimated tax payments to avoid a penalty from the IRS.
Amanda McMullen is a freelancer who has been writing professionally since 2010. She holds a bachelor's degree in mathematics and statistics and a second bachelor's degree in integrated mathematics education.