SOCIAL SECURITY Q & A: Paying taxes on your Social Security benefitsMy income is high enough that some of my Social Security benefits will be taxable next year. Are these taxes withheld from my monthly retirement benefits?
By: Howard Kossover, Grand Forks Herald
Q. My income is high enough that some of my Social Security benefits will be taxable next year. Are these taxes withheld from my monthly retirement benefits?
A. Taxes are not normally withheld from Social Security benefits. Based on their overall income, about one-third of people receiving Social Security have to pay federal income taxes on a portion of those benefits. Of these people, some pay tax on up to 50 percent of benefits and some on up to 85 percent of benefits. No one pays federal income tax on more than 85 percent of his or her benefits.
Based on Internal Revenue Service rules, if you file a federal tax return as an individual with combined income between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your Social Security benefits. With income more than $34,000, up to 85 percent of your benefits may be taxable. If you file a joint return, and you and your spouse have a combined income that is between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits. With income more than $44,000, up to 85 percent of your benefits may be taxable. If married but filing a separate tax return, you probably will pay taxes on your benefits. See www.socialsecurity.gov/planners/taxes.htm. Social Security employees cannot provide tax advice.
If you do have to pay taxes on your Social Security benefits, you can make quarterly estimated tax payments to the IRS or choose to have federal taxes voluntarily withheld from your benefits. Request voluntary federal tax withholding by completing IRS form W-4V (Voluntary Withholding Request), online at www.irs.gov/pub/irs-pdf/fw4v.pdf , and returning it to your local Social Security office
You select a percentage of benefits for tax withholding, not a flat dollar amount, when completing form W-4V. Options are to have 7 percent, 10 percent, 15 percent or 25 percent of your monthly benefit withheld. Voluntary withholding is only for federal taxes, not state or local taxes. Withholding is changed by submitting a revised W-4V.
Kossover is the Social Security public affairs specialist for North Dakota and western Minnesota. Reach him at email@example.com. Read his blog at socialsecurityinfo.areavoices.com.