Social Security Tax Withholding Question

[Livefree]

I've been retired 5 years, and just started taking Social Security. I figured it would be convenient to have taxes withheld going forward, so I won't have to pay quarterly taxes anymore.


But I think only Federal Taxes are withheld, and not state Taxes.


If I have to pay state taxes quarterly, it may not be worth it..


Does anyone do this, and just pay the state taxes separately?

 

[braumeister]

Most states don't tax Social Security payments, so it's probably not worth their while to set up a withholding scheme.

 

[xlf11]

Even you can for IRS tax, the max of withholding is 22% and has to be done with paper form sending to local SSA office. You cannot do it like changing DD bank on the SSA website.

 

[pb4uski]

I didn't know that was even possible. I do tax returns for 4 different people collecting SS and no FIT withheld for any of them.

 

[braumeister]

I didn't know that was even possible. I do tax returns for 4 different people collecting SS and no FIT withheld for any of them.

It's simple to set up when you first start collecting, but cumbersome to change later.

You can have 7, 10, 12 or 22 percent of your monthly benefit withheld.

No other options.

 

[RetMD21]

I helped MIL set this up after decades of no withholding. I thought we did it in her online account.

 

[JJ577274]

I selected the option to withhold Fed Income tax (10%) on my SSA application. That was ignored and no tax was ever taken out. I have subsequently had to change my State pension withholding three times to achieve what I calculate as necessary.


I first went from Single 2 to Single 1, then from Single 1 to Single 0, and finally went with Single 0 + $60.00 additional monthly.


My State Pension still uses the old method of Marital Status and exemptions for now.

 

[braumeister]

State tax withholding can be tricky.
My military pension makes it easy to change withholding online for federal, but I can't withhold at all for state. The reason is that a state has to set up a formal agreement with the military to handle this, and my state has not done so. My guess is that this is part of the reason Social Security won't do it -- they don't want to open a can of worms where they will withhold from some states but not others.

 

[Livefree]

It's simple to set up when you first start collecting, but cumbersome to change later.
No other options.

I was able to download and print the form from social security, which has to be mailed in (No uploading or online changes allowed)


You can use the same form to stop withholding

 

[braumeister]

I was able to download and print the form from social security, which has to be mailed in (No uploading or online changes allowed)

You can use the same form to stop withholding

When you see the withholding take effect, please let us know how long it took for them to process it.

 

[MissMolly]

I do my Federal withholding through my pension. It's a state pension, but they won't withhold for state! Since my state taxes are low, I just pay it in a lump in March using their on-line site.

 

[Livefree]

When you see the withholding take effect, please let us know how long it took for them to process it.

The rep I spoke with yesterday, said if I mailed it this week, the change should take place for next months payment.


My payment is the 4th Wednesday of every month...we'll see..

 

[Walt34]

I opted to have 10% taken out when I started SS and that seems to work out very closely for us. My former employer in MD will withhold taxes on the pension for MD but I didn't really expect them to do all the weird calculations for all the other states that have income taxes, and they won't. So since I have to send in quarterly payments for the pension anyway it is little additional bother to include SS with it too.

Fortunately WV's governor is working on eliminating the WV income tax altogether, perhaps even starting with a 10% cut this year. It'll probably happen about the same time we move out of WV for a CCRC in PA.

 

[Sue J]

I started SS withholding earlier this year. I mailed in the form and it did not happen in the first month after submitting, but it did in the second month.

 

[5Miler]

I started SS last November with first payment in December. I must have blown past the withholding part when I applied so had to send in the form after I was approved near the first of November. My first check in December had the proper 12% withheld as requested so it didn't take too long. My payment is 2nd Wednesday each month.

 

[rk911]

It's simple to set up when you first start collecting, but cumbersome to change later.
No other options.

set up quarterly payments on EFTPS. takes me maybe 15-min once a year.

 

[TheWizard]

I have max Federal tax withheld from my SS payment.
SS isn't taxed in MA, so that's a non issue.

But since SS withholding isn't finely adjustable, I tweak the withholding on other income streams, in 1% increments, to get overall amount where I want it for the year...

 

[Bpollen]

I withhold taxes from SS. I have state taxes. I don't have to worry about state taxes (yet), because my income isn't high enough to have to prepay state income taxes. (this may change after I start RMDs from my IRA) I love withholding the taxes from SS because I don't have to worry about being penalized for not prepaying federal income taxes. I withhold 12% at this time, which is enough for my income level. I'll increase that when my income increases from RMDs (if 22% is enough). This is convenient for me, so I recommend it. It may not be satisfactory for everyone.

The one drawback to this is that it takes a couple of months for the SS Administration to start the withholding OR to effect any change. So plan for that.

 

[Souschef]

set up quarterly payments on EFTPS. takes me maybe 15-min once a year.

+1 for EFTPS. I would rather manage my withholding.

 

[Brett_Cameron]

+1 for EFTPS. I would rather manage my withholding.

I never had SS withhold. I did it through my pension. Then pension admin became incompetent (or I did) so now I just do monthly EFPTS.

 

[Dash man]

I withhold 22% from social security and a fixed amount from my pension. I still pay quarterly taxes using EFTPS to cover Roth conversions, dividends, interest and some rental income. I’m hoping most of the taxes will go away after 2025.

 

[TheWizard]

... I’m hoping most of the taxes will go away after 2025.

I wish they would, too.
But in reality, they'll probably still be around...

 

[CRLLS]

We have SS, an annuitized life insurance policy and any IRA withdrawals all set up for withholding. On an annual basis, they are withholding a bit more than we need as they don't account for any personal deductions. It all works out when I plan/do Roth conversions as I already know what taxes were overpaid, making the tax on the conversion a bit lower chunk than otherwise necessary.

 

[single2019]

I’m hoping most of the taxes will go away after 2025.

You must know something that we don’t know. I know of only one scenario that will make taxes go away. But I won’t be posting after that