Pension is being counted as earned income for Social Security Taxes

Forum|Forum|1 year ago
March 18, 2025
3 replies
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Why is turbo tax listing my pension as earned income and taxing my social security benefits at 85%?

It's not supposed to be considered earned income per Social Security Admin

DoninGA

Go to this IRS Publication 915 and review the worksheets provided. There is no reference to earned income. It is taxable income as stated on the worksheet - Combine the amounts from Form 1040 or 1040-SR, lines 1z, 2b, 3b, 4b, 5b, 7, and 8

The Form 1040 Lines 4b and 5b is the taxable amount of an IRA or Pension distribution.

https://www.irs.gov/pub/irs-pdf/p915.pdf

ldruth61Author

I understand it's taxable income per the IRS, but per the Social Security Admin It's not supposed to count towards income related to Social Security Taxes and in turbo tax this are taxing it at 85%

DoninGA

@ldruth61 wrote:

I understand it's taxable income per the IRS, but per the Social Security Admin It's not supposed to count towards income related to Social Security Taxes and in turbo tax this are taxing it at 85%

No, the SS benefits can be taxed at Up To 85% depending on the amount of other taxable income being reported.

ThomasM125

You are correct, pension distributions are not earned income but they do factor into the amount of your social security benefits that are taxable. The income used to determine the amount of your social security benefits that are taxable includes unearned income. You can learn more from this Intuit Article.

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ldruth61Author

unearned income does not count. Where to you get your information?

ThomasM125

Per this article from the IRS, pension income does count when determining the taxable portion of your benefits:

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Opus 17

You may be thinking of something different: If you start taking your social security benefit before full retirement age, having too much earned income may reduce the amount of social security benefit you receive in the next year. This reduction goes away when you reach your full retirement age, and does not apply to unearned income.

This is completely separate from the calculation of how much of your benefit is taxable.