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As of November 2012, there were seven states that did not charge any type of state income tax, including taxes on Social Security benefits. These states include Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Two more states, Tennessee and New Hampshire, do not tax income or Social Security benefits, but do tax interest and dividends.
You arenât taxed on Social Security Benefits for your Dependants. Since your child is the person with the legal right to receive these Social Security Benefits, theyâre only taxable to her. These benefits are reported on her return if she files a return. This is true even if the benefits are deposited in your account.