SS W-4V options 0, 7, 10, 12, 22% ? WTH?

ERD50

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I'm looking into my options for having Fed tax withheld (I prefer withholding to Quarterly payments for several reasons). I start SS this year, and I see that:

You may choose to withhold 7%, 10%, 12%, or 22% of your monthly payment.

I LOL'd at that, but it was a sad sort of laugh. The Feds really can't get their computers set up to accept any whole number percent, or a fixed $ amount(*)? And where did those numbers come from (marginal rates at some point in history?).

And those are large deltas, no way to fine tune your w/h with such large jumps. And since they require you to mail-in or visit to update the amount, it could be tough to try to do one value part of the year, and another for the rest of the year to hit some in-between average.

(*) giving this a bit more thought, it's actually more work to program a computer to accept those four specific values, than it is to accept anything fro 0~100.

To accept 0~100, there is just one test: If ( (WH > 100) OR (WH < 0) ) {SHOW ERROR MSG; RET TO INPUT}

But for

For 7%, 10%, 12%, or 22%, you either need to set up a dialog check box for each of those points (and update it if the values change), or test for each of them, or round to nearest and ask if that's OK. Either way, it's more code.

And once you have the value for WH, the computer just multiplies that by the total $. It's the same code, regardless if it is 1%, 99%, 57% or limited to 7%, 10%, 12%, or 22% - it's still just TOTAL * WH.

Is this just silly/stupid, or am I missing something?
 
You are really over thinking this. Just select a percentage that is near the amount you need. Since it is only for part of the year reassess the withholding after you file your taxes next year. I am in the same situation in starting my social security this year. I also don't do quarterly estimates. If I'm under withheld come the end of the year I'll just do a quick IRA withdrawal with a large amount going to taxes.
 
You're overthinking the actual coding technique, but the breakpoints of 7%, 10%, 12%, or 22% seems like a reasonable question to raise. My guess is that after analyzing millions of tax returns of retirees receiving SS recipients, these numbers represent the four most common percentages of taxation levels for SS benefits for the four most common income brackets.
 
I still can’t wrap my head around why you have to do it by paper and cant do it online. I have a small federal pension can do it online and designated a dollar amount.
 
This is The Government we're dealing with here...
🤨
Yes, it’s the government. Nothing can be easily explained. Even my basic pension from when I worked for them took ten months to start after I applied and that’s after numerous phone calls and finally contacting the congress persons office. They did give me a check for all those back months. But consistency through the government doesn’t exist.
 
You are really over thinking this. Just select a percentage that is near the amount you need. Since it is only for part of the year reassess the withholding after you file your taxes next year. I am in the same situation in starting my social security this year. I also don't do quarterly estimates. If I'm under withheld come the end of the year I'll just do a quick IRA withdrawal with a large amount going to taxes.
I commonly overthink things, but this is *NOT* one of those times, and I have so much experience in overthinking things, I oughta know! :)

If I need between the 12% and 22% withheld, neither one is very near. Worst case, say I need the middle value 17%. When do I mail in my request to get it to apply starting June? Even a month off is a not insignificant delta.

I prefer to underpay by less than $1,000, to avoid a penalty, not loan $ to the Feds, and not have to think about when I might see that refund (they take out the payment on the day I specify, typically April 15th - so I know exactly where I stand).

And if SS is a smaller amount of your total taxable income (maybe you get a lot of divs/cap gains), 22% might not be enough.

It's just silly. Thinking about this some more ( :) ), it's really the Feds that are overthinking this, by even specifying these percentages.
 
I have nothing withheld from Social Security. I have dealt with the taxes by adjusting the withholding from my pension (which is easy to change and fine tune) and, as necessary, taking a December tIRA withdrawal with 99% withholding.
 
I have nothing withheld from Social Security. I have dealt with the taxes by adjusting the withholding from my pension (which is easy to change and fine tune) and, as necessary, taking a December tIRA withdrawal with 99% withholding.
+1 I adjust my pension withholding to cover our entire expected federal tax for the year.
 
I have nothing withheld from Social Security. I have dealt with the taxes by adjusting the withholding from my pension (which is easy to change and fine tune) and, as necessary, taking a December tIRA withdrawal with 99% withholding.

+1 I adjust my pension withholding to cover our entire expected federal tax for the year.

And that's fine for you. But not everyone has this option. It still doesn't justify the odd restrictions for SSA withdrawals.

[QUOTE="pb4uski, post: 3112537, member: 18342" ]

pjm-7 said:

You are really over thinking this. ...
+1
[/QUOTE]

I stand by my viewpoint that I'm not the one over-thinking this. The simple (not overthinking) approach would be that SSA allows 0-100% withholding. What could be simpler, and involve less thinking? They should also allow a fixed $ amount. When we plan our taxes, that's the simple view. For example: "I need $6,000 w/h this year to meet the Safe Harbor rule. Hey, that's $500/month!" Simple - very little thinking involved.

To be clear, I'm not saying there aren't ways to deal with this. But ALL of them are more complicated than if SSA simply allowed any w/h from 0-100, and preferably a fixed $ amount.

Is there really a case to be made against this?
 
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As an example, I can (and am) delaying my pension until age 72 (to maximize payout and survivor benefits). RMDs don't hit until age 72. But SSA kicks in at 70 (at the latest). So my options are limited.
 
As an example, I can (and am) delaying my pension until age 72 (to maximize payout and survivor benefits). RMDs don't hit until age 72. But SSA kicks in at 70 (at the latest). So my options are limited.
You can still take a tIRA withdrawal in December and use it to pay taxes. In that situation, they are considered to have been withheld throughout the year.

Ideally, every W-4 (including the one for social security) would allow you to specify a precise dollar amount so you could easily withhold exactly what you need to withhold, instead of picking a code (which has a withholding amount calculated by your employer) and then adding or subtracting a dollar amount. But the people like you and me, who would be most served by such a system, are in the minority . The vast majority of people in this country cannot or will not calculate their taxes in advance and figure out the proper dollar withholding. So there is a formula based on the code they choose.

In my view, the choices are complaining about the problem or working around it. I prefer getting the job done to complaining, so I suggested two ways to work around it that I have successfully used.
 
I have nothing withheld from Social Security. I have dealt with the taxes by adjusting the withholding from my pension (which is easy to change and fine tune) and, as necessary, taking a December tIRA withdrawal with 99% withholding.
Ok, I know about the 100% withholding trick to pay your yearly taxes. What is the 99% trick?
 
^^^ It's the same trick... it is just that some brokerages don't allow 100% withholding and limit it to 99% so there is 1% slippage.
 
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^^^ It's the same trick... it is just that some brokerages don't allow 100% withhding and limit it to 99% so there is 1% slippage.
Exactly.
 
I have nothing withheld from Social Security. I have dealt with the taxes by adjusting the withholding from my pension (which is easy to change and fine tune) and, as necessary, taking a December tIRA withdrawal with 99% withholding.
That is exactly what I do as well for both my and DW's SS checks. It's easy to estimate from last year's taxes and easy to fine tune around October or so to make it so I owe a dollar or two. No way I want a refund, especially for state income taxes. Too many years California issued 'warrants' because they were too broke to pay their tax bill. Gee, no penalty for them not pay their debt on time, like they would with me. Ha! And with this year's state budget 10's of billions of dollars underfunded, I'm gonna guess they won't be in too big a hurry to issue refunds this tax year either.
 
As an example, I can (and am) delaying my pension until age 72 (to maximize payout and survivor benefits). RMDs don't hit until age 72. But SSA kicks in at 70 (at the latest). So my options are limited.
So you are saying that age 70 the only taxable income you would have is Social Security? No taxable brokerage accounts paying interest or dividends? If so, I would declare 0% and plan on setting up an EFTPS account for making quarterly payments for all taxable income streams.

Regarding the choices for form W4v - contact your Congressional representatives. There is no case for you individually to ask for an exception. I am guessing these per centage choices were chosen by the IRS and made effective through hearings in Congress resulting in an entry in the Congressional Record. Your representative will know and can give you an explanation. .
 
As an example, I can (and am) delaying my pension until age 72 (to maximize payout and survivor benefits). RMDs don't hit until age 72. But SSA kicks in at 70 (at the latest). So my options are limited.
Sounds like at this time you are limited to withholding on IRA ithdrawals or doing estimated payments.
 
So you are saying that age 70 the only taxable income you would have is Social Security? No taxable brokerage accounts paying interest or dividends? ....

No, I'm saying that if a person had SS, and taxable income (like divs, int, cap gains - which don't normally allow for tax WH ), but no other places to have tax WH, they'd be pretty stuck with those fixed % and it would be hard to match w/o going to the trouble of quarterly payments (which I think still need to match the timing of something like cap gains?), or changing your SS WH part way through the year to average it out.
Regarding the choices for form W4v - contact your Congressional representatives. There is no case for you individually to ask for an exception. I am guessing these per centage choices were chosen by the IRS and made effective through hearings in Congress resulting in an entry in the Congressional Record. Your representative will know and can give you an explanation. .
Well, I should give that a try. I must admit, I am not as confident as you that they would know and could explain it. I'd expect a "Thank you for contacting us, and blah, blah, blah".
 
You can still take a tIRA withdrawal in December and use it to pay taxes. In that situation, they are considered to have been withheld throughout the year. ...
Yes, but I'm doing Roth conversions, it would be counter-productive to do a tIRA WD at this time.
... Ideally, every W-4 (including the one for social security) would allow you to specify a precise dollar amount so you could easily withhold exactly what you need to withhold, instead of picking a code (which has a withholding amount calculated by your employer) and then adding or subtracting a dollar amount. But the people like you and me, who would be most served by such a system, are in the minority . The vast majority of people in this country cannot or will not calculate their taxes in advance and figure out the proper dollar withholding. So there is a formula based on the code they choose. ...
Yes, agree, I think we had that discussion before. My wife does get a small pension, and the W-4 is like you say - you need to know how to 'trick' the other inputs to get it to just add a fixed $ amount. It ought to be an option at least, for those who don't want it, they can go the old route.
... In my view, the choices are complaining about the problem or working around it. I prefer getting the job done to complaining, so I suggested two ways to work around it that I have successfully used.

Clearly, I will use one of the work-arounds. I'm just venting my frustration that things are needlessly complicated/limited. And holding out for the chance that one of our forum members might bring up a method I'm unaware of, or show me I missed something.

I'll try the Congress-person approach, but color me skeptical.
 
My only income at the moment is from SS, my pathetically small pension (barely covers cell phone bill) and whatever interest/divs/capital gains I accrue from my small after tax brokerage account. All in all, with this income I owe no state or fed taxes.

I made the decision to do Roth conversions so I got out my $4 solar calculator and figured out that 12% withholding from my SS would just about fit the bill. I have been doing this for 3 years now and usually end up with about $200 or so refund on my fed taxes but still pay no state tax so I don't bother with withholding there.

There are limited options for selecting a withholding percentage via SS but it still beats quarterly payments in my opinion. While the exact withholding amount is not spot on to what I would do if given the choice, it is close enough for me.
 
Yes, it’s the government. Nothing can be easily explained. Even my basic pension from when I worked for them took ten months to start after I applied and that’s after numerous phone calls and finally contacting the congress persons office. They did give me a check for all those back months. But consistency through the government doesn’t exist.
Sure the gummint is consistent! Consistently screwed up - but YMMV.
 
I have nothing withheld from Social Security. I have dealt with the taxes by adjusting the withholding from my pension (which is easy to change and fine tune) and, as necessary, taking a December tIRA withdrawal with 99% withholding.
I do most withholding from my 401(k) RMD+. I don't worry about SS as I always get money back. Also, my pension has withholding.
 
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