Margaret Delacroix, 68, sat at her kitchen table in Toledo, Ohio on a gray January morning, staring at a single IRS form. Her only income in was her $1,487 monthly Social Security check — and she was terrified she owed the government money she simply did not have.
I have talked to dozens of people exactly like Margaret. The fear is real, but the answer — once you understand the rules — can actually deliver a surprise in her favor. Here is exactly what the IRS says, what the 2026 law changes mean, and whether a refund check could land in your mailbox this spring.
Key Takeaway
If Social Security benefits were your only income in 2025, your benefits are generally not taxable and you probably do not need to file a federal return. But you may still be owed a refund — if taxes were withheld from your benefits during the year. A refund is money the government returns to you.
The Question Margaret Asked at Her Kitchen Table
Read more: Social Security Payment Dates 2026: Full Schedule
Margaret receives $1,487 per month from Social Security. That is $17,844 per year — roughly what a modest one-bedroom apartment costs annually in Toledo. She has no pension, no part-time job, no interest income above a few dollars.
Two years ago, a neighbor told her to elect voluntary tax withholding from her benefits. Margaret agreed, choosing a flat 10% withholding rate. The Social Security Administration began deducting $148.70 every month. Over , that totaled $1,784.40 withheld.
Here is the twist: because Social Security was her only income, her benefits were not taxable at all. Her federal income tax liability was $0. Every dollar withheld belongs back in her pocket. Margaret is owed a refund of $1,784.40. She just has to file Form 1040-SR to claim it.
That is the quiet secret millions of seniors miss every filing season. You do not file because you owe. You file because the government is holding your money.
What “Only Social Security Income” Actually Means in Dollars
The IRS uses a specific calculation called “combined income” to decide whether any portion of your benefits is taxable. Combined income equals your adjusted gross income, plus nontaxable interest, plus half of your Social Security benefits.
If Social Security is truly your only income, half of your benefits is your entire combined income. For Margaret, that is $8,922. The individual threshold where benefits become taxable starts at $25,000. She clears that threshold by more than $16,000.
One important exception applies to earned wages. Any earned wages are subject to withholding for income tax, Social Security tax, and Medicare tax even if the taxpayer is already receiving Social Security benefits. If Margaret picked up a $500 holiday retail shift in December, that changes her picture. Wages count as income and could push her toward taxability.
The 2026 Law Change That Could Quietly Shift Your Tax Picture
Read more: Why Your 2026 Social Security Payment Date Shifted 6 Days
This is the part that keeps me up at night when I think about people like Margaret. A significant structural change is now in motion. Starting in 2026, the law moves toward taxing Social Security benefits in a manner similar to private pension income. The lower-income thresholds — the $25,000 and $32,000 floors — are scheduled to phase out gradually through .
What does that mean in plain English? Right now, a single retiree earning only Social Security at $1,927 per month — about what a one-bedroom costs in Phoenix — pays zero federal income tax on those benefits. Under the phased pension-model approach, more of those benefits could eventually become subject to tax over the coming two decades.
For 2025 taxes filed in 2026, the old thresholds still largely govern your return. But understanding the direction of travel helps you plan now, not in a panic ten years from now.
⚠ Opposing View Worth Hearing
Some tax professionals argue that seniors with only Social Security income should never bother filing. The logic: if you owe nothing, why spend time and energy on paperwork? The counter-argument — which I believe — is simple. If you elected voluntary withholding and the SSA deducted even $50 all year, you are leaving money on the table. Filing is free using the IRS Free File program for taxpayers earning under $84,000. The refund always beats the hassle.
| Your Situation | Need to File? | Possible Refund? | Form to Use |
|---|---|---|---|
| SS only, no withholding elected | Probably not | No refund | Form 1040-SR |
| SS only, voluntary withholding elected | Yes | Yes, if over-withheld | Form 1040-SR |
| SS + small pension income | Possibly | Maybe | Form 1040-SR |
| SS + earned income (part-time work) | Likely yes | Yes, EITC possible | Form 1040-SR |
| SS below combined income threshold | No | No | Not required |
How Voluntary Withholding Creates a Real Refund
I filed IRS Form W-4V and asked SSA to withhold 10% from every monthly payment. My benefit in was $1,847. SSA withheld $184.70 that month.
Over twelve months, that added up to roughly $2,216.40 withheld. But my taxable Social Security turned out to be zero. Every dollar withheld came back as a refund.
You can choose 7%, 10%, 12%, or 22%—those are your only options on Form W-4V. SSA does not allow custom percentages. Source: IRS.gov Form W-4V instructions.
Key point: Withholding is voluntary. SSA never automatically deducts federal tax. You must submit Form W-4V to your local Social Security office or mail it directly to SSA. Download it at IRS.gov.
The Combined Income Formula That Determines Taxability
Read more: How the IRS Taxes Social Security in 2026: The $25,000 Rule
The IRS uses a specific formula called combined income. Here is how it works: take your adjusted gross income, add any nontaxable interest, then add 50% of your annual Social Security benefit.
If that number stays below the threshold for your filing status, none of your benefits are taxable in . These thresholds have not been indexed to inflation since , which is why more retirees get caught every year.
| Filing Status | Combined Income: 0% Taxable | Combined Income: Up to 50% Taxable | Combined Income: Up to 85% Taxable |
|---|---|---|---|
| Single | Below $25,000 | $25,000–$34,000 | Above $34,000 |
| Married Filing Jointly | Below $32,000 | $32,000–$44,000 | Above $44,000 |
| Married Filing Separately | None (usually 85% taxable) | Rarely applicable | Usually all filers |
Source: SSA.gov — Benefits Planner: Income Taxes and Your Social Security Benefits.
A Real Example: My Own Calculation
My annual Social Security benefit in is $22,164. I have no other income. Here is my combined income calculation:
My combined income of $11,082 sits well below the $25,000 single-filer threshold. Zero percent of my benefits are taxable. I owe nothing.
But I had been withholding 10% all year just to be safe. SSA withheld $2,216.40 total. Filing a return gets every cent refunded to me. That is a meaningful check arriving in my bank account.
Takeaway: Filing is worth the effort even when you expect zero tax. If you withheld anything, a return unlocks that refund. The IRS will not send it automatically.
The Earned Income Tax Credit: A Special Case
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