IRS Notice 703: Social Security Income Form

Article Summary:

IRS Notice 703 helps taxpayers complete their federal income tax returns and find out if their Social Security income is taxable. This notice is issued to all taxpayers and does not need to be returned to the IRS or SSA.

Come tax season, one of the many documents you can expect to receive is IRS Notice 703. This notice may be easy to overlook, as it comprises a single page and you do not actually need to return it to the IRS or SSA with your taxes. However, it’s still helpful to have when filing your taxes, especially if you receive Social Security benefits.

IRS Notice 703 will help you determine if you need to pay taxes on your Social Security benefits. Let’s go over IRS Notice 703 to help you better understand how the information in this document applies to your Social Security income.

What is IRS Notice 703?

IRS Notice 703 is a document issued by the Internal Revenue Service (IRS) to help taxpayers determine whether or not their Social Security benefits are taxable. Taxpayers should automatically receive this document alongside their SSA-1099.

The information in IRS Notice 703 summarizes three income sources: taxable income, tax-exempt interest and exclusions, and Social Security Administration (SSA) and Social Security Disability Insurance (SSDI) benefits.

Pro Tip

Among the most common mistakes taxpayers make when filing their taxes are missing the due date, filing the wrong type of form, and using the wrong method to file the return. Make sure to avoid these mistakes when doing your own taxes!

What are Social Security benefits?

Social Security benefits are payments made to eligible retired adults, people with disabilities, or family members of these beneficiaries. The following are the four types of Social Security benefits:

  1. Retirement benefits
  2. Disability payments
  3. Payments to dependents
  4. Survivors’ benefits

Supplemental Security Income (SSI) payments are not considered Social Security benefits, nor are they taxable.

Retirement benefits

You are eligible for retirement benefits if you have been employed and have reached retirement age, which as of 2022 is between the ages of 66 and 67. To be eligible, you generally need to work ten years for yourself or at a job where you pay FICA taxes.

Pensions and payments from retirement plans are usually taxable unless the payments come from a designated Roth account.

Disability payments

You’re eligible for disability benefits if you’ve worked five to ten years, you are not at retirement age, and you have a physical or mental disability that stops you from working full-time for at least a year.

Disability benefits are not usually considered taxable income.

Payments to dependents

Benefits for dependents are given to spouses of retired or disabled workers who qualify for retirement or disability benefits. Eligible spouses must be at least 62 years old and taking care of the worker’s child, who must be age 16 or younger. Children who become disabled before the age of 22 can also receive these benefits.

Dependent benefits may be taxable in certain situations.

Survivors’ benefits

Survivors’ benefits are granted to widows, widowers, disabled children, and children under 18 of deceased workers who were eligible for retirement or disability benefits. The amount the survivor receives depends on the earnings of the deceased.

Survivors’ benefits may be taxable under certain circumstances.

How do I know if my Social Security benefits are taxable?

This is where IRS Notice 703 will be helpful. Taxpayers use this notice to determine whether or not their Social Security benefits are tax deductible.

The general rule of thumb is that you will not have to pay taxes on your Social Security benefits if they are your only source of income. However, if you have a substantial amount of income in addition to your Social Security, you likely will have to pay taxes on your benefits.

The amount you owe in taxes is based on your filing status and the following IRS rules:

  • You must pay up to 50% in income taxes if you file a tax return as an individual and your combined income is between $25,000 and $34,000.
  • You must pay up to 85% in taxes if you file a tax return as an individual and your combined income is more than $34,000.
  • Married couples filing jointly with a combined income of $32,000 to $44,000 may pay taxes on 50% of their benefits.
  • If you file a joint return and have a combined income of over $44,000, you may have to pay up to 85% in taxes.

If you are married and file separate tax returns, you will most likely need to pay income taxes on your benefits. In any case, you will never be taxed more than 85%.

How to pay taxes on Social Security

If you do need to pay income tax on your Social Security benefits, you have a couple of options available:

  1. You can make estimated quarterly payments to the IRS.
  2. You can choose to have your taxes withheld from your benefits. You can do this by filling out a Voluntary Withholding Request.

What does an IRS Notice 703 form look like?

IRS Notice 703 will be fairly easy to spot among your tax forms. It will have “Notice 703” printed on the top left corner of the paper, and “Department of Treasury, Internal Revenue Service” will be printed on the right.

Here is what IRS Notice 703 looks like:

IRS Notice 703
IRS Notice 703

How do I fill out an IRS Notice 703 form?

You do not actually need to fill out IRS Notice 703. In fact, at the bottom of the page, you will see a note to not return the notice to the SSA or IRS. The document is yours to keep and only serves to help you calculate your taxable income for that tax year.

FAQ

How do I figure out how much of my Social Security is taxable?

IRS Notice 703 is designed to help you determine if your Social Security is taxable. If you’re still unsure, you can also hire a CPA to help you complete your tax return.

At what age is Social Security no longer taxed?

Social Security benefits are taxable regardless of age. The amount taxed is based on your income level, not how old you are.

Can the IRS take away your Social Security?

The IRS can take up to 15% of your Social Security payments to resolve your tax debt.

Key Takeaways

  • IRS Notice 703 is a brief worksheet intended to help taxpayers determine whether their Social Security payments are taxable or not.
  • Social Security benefits include retirement benefits, disability payments, survivors’ benefits, and payments to dependents.
  • The amount of taxes you need to pay on your Social Security is determined by your income level and filing status.
  • If you owe taxes on your Social Security benefits, you can make quarterly tax payments to the IRS or choose to have the taxes withheld from your Social Security payments.

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View Article Sources
  1. About Notice 703, Read This To See If Your Social Security Benefits May Be Taxable — IRS.gov
  2. Income Taxes And Your Social Security Benefit — Social Security
  3. Topic No. 410 Pensions and Annuities — IRS.gov
  4. Social Security Benefits: Retirement, Disability, Dependents, and Survivors (OASDI) — NOLO
  5. Why are disability benefits taxable? — Disability-Benefits-Help.org
  6. Survivors’ Benefits — IRS.gov
  7. Voluntary Withholding Request — IRS.gov
  8. 1099 vs W2 vs W9: Key Differences — SuperMoney
  9. Filling out a 1099 Form: Avoid These Common Pitfalls — SuperMoney
  10. 5 Sources of Retirement Income — SuperMoney
  11. I’m Disabled, Not Dead – Working While Collecting SSI or SSDI — SuperMoney
  12. Accountants vs. CPAs: Which Is The Right Choice For You? — SuperMoney
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