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

It does seem odd you can effectively withhold any amount on a W-4, but SS recipients are restricted to 7-10-12-22 percent on W-4V’s - both are IRS functions. I’d like to withhold more than 22% while I’m doing Roth conversions. I assume the 10, 12 and 22% correspond to current tax brackets, but no idea where 7% comes from…
 
Is this just silly/stupid, or am I missing something?
I suspect you're missing that the SSA's software is likely several million lines of code written in COBOL in the 1960s and everyone's too scared to touch it. You won't find a whole lot of "dialog check boxes" in it either.
 
I suspect you're missing that the SSA's software is likely several million lines of code written in COBOL in the 1960s and everyone's too scared to touch it. You won't find a whole lot of "dialog check boxes" in it either.
Which is exactly why it would have been easier to allow 0~100 instead of 5 disconnected, discreet points. Though, as you say, now that it's done. they may be reluctant to touch the old COBOL code. Sigh.
 
I suspect you're missing that the SSA's software is likely several million lines of code written in COBOL in the 1960s and everyone's too scared to touch it. You won't find a whole lot of "dialog check boxes" in it either.
WOW. I thought surely you were exaggerating to make a point, but evidently you're not. I'm amazed and disappointed, though our leaders seem to be among the least tech savvy of all professions? I have watched a few committee hearings where it's been painfully obvious most Congress persons are completely clueless about tech. Deficit spending past, present and future can't be helping but what a time bomb...
SSA’s IT environment includes hundreds of applications and an array of technologies. To process its core workloads, such as retirement and disability claims, the Agency relies on decades-old applications programmed with Common Business Oriented Language (COBOL). SSA maintains more than 60 million lines of COBOL today, along with millions more lines of other legacy programming languages.

Additionally, as SSA experiences workforce turnover, employee knowledge of, and ability to work with, older technologies diminishes. SSA’s next generation of employees will expect to work with current, mainstream technologies, such as open-source databases and cloud computing.

 
I suspect you're missing that the SSA's software is likely several million lines of code written in COBOL in the 1960s and everyone's too scared to touch it. You won't find a whole lot of "dialog check boxes" in it either.

WOW. I thought surely you were exaggerating to make a point, but evidently you're not. I'm amazed and disappointed, though our leaders seem to be among the least tech savvy of all professions? I have watched a few committee hearings where it's been painfully obvious most Congress persons are completely clueless about tech. Deficit spending past, present and future can't be helping but what a time bomb...


And to add insult to injury, some interesting timing here, but this morning there was a segment on how you can go to the SSA website and find the most popular baby names for a given year!


Our tax dollars at work (on the wrong things!) Argggghhhh!!!!
 
And to add insult to injury, some interesting timing here, but this morning there was a segment on how you can go to the SSA website and find the most popular baby names for a given year!


Our tax dollars at work (on the wrong things!) Argggghhhh!!!!
Sad to say but such things just seem to come with the gummint territory. I usually say "This is me being surprised" but, honestly, I guess I'm not surprised - just disappointed. YMMV
 
We withhold 12 per cent from SS and inherited Ira, 10 % from Roth conversions. Get a few thousand back and ok with that.
 
^^^ 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.
One more question about this please, to make sure I got it right. Ok, so let's say I will owe $15K fed tax and $5K state tax, and my RMD this year is $25K. I do 3 IRA withdrawals near the end of the year:
1) $15K, 100% withholding for fed taxes
2) $5K, 100% withholding for state taxes
3) $5K (balance to satisfy RMD total), with 0% withheld
Is our Uncle Samuel happy?
 
One more question about this please, to make sure I got it right. Ok, so let's say I will owe $15K fed tax and $5K state tax, and my RMD this year is $25K. I do 3 IRA withdrawals near the end of the year:
1) $15K, 100% withholding for fed taxes
2) $5K, 100% withholding for state taxes
3) $5K (balance to satisfy RMD total), with 0% withheld
Is our Uncle Samuel happy?
I had posted earlier, I did a Fed massive withholding at the end of the year. I got a tax refund of about $3K from Fed / IRS but got hit with a $4 penalty. I asked this forum, and apparently, they do track what is due each quarter and since I did not withhold per quarter, I got hit with a penalty, even though I was refunded with a much larger sum of money. I used Turbo Tax and that's what it calculated and deducted from my refund.
 
@RetiredHappy Thanks for that. Unless I am missing something, I would call that near ideal. A $4 penalty is (literally) a small price to pay for using this "trick", and making the IRS happy enough.
 
@RetiredHappy Thanks for that. Unless I am missing something, I would call that near ideal. A $4 penalty is (literally) a small price to pay for using this "trick", and making the IRS happy enough.
I agree, $4 is nothing. I am doing the same this year but I also did a small quarterly withholding to try to "cheat" the system. In Jan, we pulled something like $50K from IRA to partially satisfy RMD but did no withholding. We are doing a final RMD in Dec to withhold 99% of the amount for IRS. Fidelity does not allow 100% withholding.
 
I had posted earlier, I did a Fed massive withholding at the end of the year. I got a tax refund of about $3K from Fed / IRS but got hit with a $4 penalty. I asked this forum, and apparently, they do track what is due each quarter and since I did not withhold per quarter, I got hit with a penalty, even though I was refunded with a much larger sum of money. I used Turbo Tax and that's what it calculated and deducted from my refund.

Sure, $4 is nothing to worry about, but it bugs me if my understanding is off. That may lead to a bigger mistake.

I have always understood timing doesn't matter with a withholding like that. Can you post a link to your other thread, please?

edit/add: Here's one reference:

 
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Sure, $4 is nothing to worry about, but it bugs me if my understanding is off. That may lead to a bigger mistake.

I have always understood timing doesn't matter with a withholding like that. Can you post a link to your other thread, please?

edit/add: Here's one reference:

OK found it:

 
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OK found it:

Thanks - I did a bit more reading in the meantime, and I think I found the 'catch':

The 'catch' is that a December withholding of your Safe Harbor amount doesn't automatically protect you from a penalty, though it would in most/many cases. The wording I found is that a December withholding is treated as if it was spread equally across the 4 quarters. So...

Let's say, for easy math, your Safe Harbor amount is $4,000, and you had that w/h in DEC. That is treated as four equally quarterly payments of $1,000. Which will work in most cases, like if your other income was from dividends that were spread evenly across the 4 quarters. But...

If your income was 'lumpy', and much higher in one quarter, the even $1,000 might not cover that quarter. So a penalty could be applied if the deficit was enough to trigger a penalty.

So I should be fine, but in case I ever need to sell enough to generate a large cap gain, I could create a penalty situation for myself. I should watch that, and spread the gain across the 4 quarters evenly if I can.

It's never easy!
 
Thanks - I did a bit more reading in the meantime, and I think I found the 'catch':

The 'catch' is that a December withholding of your Safe Harbor amount doesn't automatically protect you from a penalty, though it would in most/many cases. The wording I found is that a December withholding is treated as if it was spread equally across the 4 quarters. So...

Let's say, for easy math, your Safe Harbor amount is $4,000, and you had that w/h in DEC. That is treated as four equally quarterly payments of $1,000. Which will work in most cases, like if your other income was from dividends that were spread evenly across the 4 quarters. But...

If your income was 'lumpy', and much higher in one quarter, the even $1,000 might not cover that quarter. So a penalty could be applied if the deficit was enough to trigger a penalty.

So I should be fine, but in case I ever need to sell enough to generate a large cap gain, I could create a penalty situation for myself. I should watch that, and spread the gain across the 4 quarters evenly if I can.

It's never easy!
I think you are incorrect about that...
 
Thanks - I did a bit more reading in the meantime, and I think I found the 'catch':

The 'catch' is that a December withholding of your Safe Harbor amount doesn't automatically protect you from a penalty, though it would in most/many cases. The wording I found is that a December withholding is treated as if it was spread equally across the 4 quarters. So...

Let's say, for easy math, your Safe Harbor amount is $4,000, and you had that w/h in DEC. That is treated as four equally quarterly payments of $1,000. Which will work in most cases, like if your other income was from dividends that were spread evenly across the 4 quarters. But...

If your income was 'lumpy', and much higher in one quarter, the even $1,000 might not cover that quarter. So a penalty could be applied if the deficit was enough to trigger a penalty.

So I should be fine, but in case I ever need to sell enough to generate a large cap gain, I could create a penalty situation for myself. I should watch that, and spread the gain across the 4 quarters evenly if I can.

It's never easy!
Yep. My issue is that we have been taking a large amount for my husband's RMD in January without withholding, we did that last year and this year. I know we will be hit with another penalty for 2024 returns. By the time we realized there was a penalty when we filed taxes for 2023, we had missed withholding for 2024 Jan RMD already. I hope the penalty will be small for 2024 as well.
 
Thanks - I did a bit more reading in the meantime, and I think I found the 'catch':

The 'catch' is that a December withholding of your Safe Harbor amount doesn't automatically protect you from a penalty, though it would in most/many cases. The wording I found is that a December withholding is treated as if it was spread equally across the 4 quarters. So...

Let's say, for easy math, your Safe Harbor amount is $4,000, and you had that w/h in DEC. That is treated as four equally quarterly payments of $1,000. Which will work in most cases, like if your other income was from dividends that were spread evenly across the 4 quarters. But...

If your income was 'lumpy', and much higher in one quarter, the even $1,000 might not cover that quarter. So a penalty could be applied if the deficit was enough to trigger a penalty.

So I should be fine, but in case I ever need to sell enough to generate a large cap gain, I could create a penalty situation for myself. I should watch that, and spread the gain across the 4 quarters evenly if I can.

It's never easy!
This is not true. The withholding is treated as being paid evenly throughout the year. You are correct about that. However, income is also treated as being received equally throughout the year. The only way it’s not is if you elect to annualize your income.
 
I think you are incorrect about that...
This is not true. The withholding is treated as being paid evenly throughout the year. You are correct about that. However, income is also treated as being received equally throughout the year. The only way it’s not is if you elect to annualize your income.
I hope you are both right and I'm wrong.

So income is also automatically considered to be even across quarters, even if it wasn't (say a large cap gain in Q1)?

What accounts for RetiredHappy's $4 penalty?
 
Where and who calculated the $4 penalty?

The withholding should prevent a penalty as it is considered paid evenly throughout the year.... it is only qtrly estimated payments that have a date attached to them...

So, if you have all your income in Jan and take a RMD in Dec that you withhold all as taxes that will cover all your taxes you satisfied your payment... no penalty...

Take a look at 2210... line 6 asks for withholding for the YEAR... not when it happened but the total... if it is higher than the tax your are safe.... NO PENALTY...

 
Where and who calculated the $4 penalty?

The withholding should prevent a penalty as it is considered paid evenly throughout the year.... it is only qtrly estimated payments that have a date attached to them...

So, if you have all your income in Jan and take a RMD in Dec that you withhold all as taxes that will cover all your taxes you satisfied your payment... no penalty...

Take a look at 2210... line 6 asks for withholding for the YEAR... not when it happened but the total... if it is higher than the tax your are safe.... NO PENALTY...

If the penalty is only $4, I'd rather pay the $4 than figure out that form! What a pain.
 
If the penalty is only $4, I'd rather pay the $4 than figure out that form! What a pain.
I want someone else to figure it out for me! lol!

I am curious, as I say, $4 isn't the issue, I want to know if we all understand the rules or not. It could have a larger impact in some other scenario.
 
Ok, I know about the 100% withholding trick to pay your yearly taxes. What is the 99% trick?
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.
Can you please explain (need learning lesson) the
“December tIRA withdrawal with 99% withholding.”, when dealing with end of year taxes? Some have referred to this as end of year trick?
 
Where and who calculated the $4 penalty?

The withholding should prevent a penalty as it is considered paid evenly throughout the year.... it is only qtrly estimated payments that have a date attached to them...

So, if you have all your income in Jan and take a RMD in Dec that you withhold all as taxes that will cover all your taxes you satisfied your payment... no penalty...

Take a look at 2210... line 6 asks for withholding for the YEAR... not when it happened but the total... if it is higher than the tax your are safe.... NO PENALTY...

Now tat I looked at the form and your comments, that does seem cut and dried. I often have trouble with the way the IRS words stuff, but L6 and L7 seem exceedingly straightforward.

4 Current year tax
5 Multiply line 4 by 90% (0.90)
6 Withholding taxes. Don’t include estimated tax payments. See instructions . . . . . . . .
7 Subtract line 6 from line 4. If less than $1,000, stop; you don’t owe a penalty
 
Can you please explain (need learning lesson) the
“December tIRA withdrawal with 99% withholding.”, when dealing with end of year taxes? Some have referred to this as end of year trick?
See The RMD Solution to the Hassle of Filing Estimated Taxes in Retirement

Basically, you do not do quarterly tax payments. Instead, you pay your Fed (and probably state) taxes via a 100% withholding withdrawal from your tIRA. Advantages:
a) Allows you to do this in December, when you know more what your tax/income is for the year
b) Lets you skip quarterly taxes
c) Lets you pay via tIRA funds, and not use up your cash
d) Lets you (at least partially) satisfy RMD requirements for the year
e) Helps you reduce the size of your tIRA, reducing future RMD amounts
 
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Where and who calculated the $4 penalty?

The withholding should prevent a penalty as it is considered paid evenly throughout the year.... it is only qtrly estimated payments that have a date attached to them...

So, if you have all your income in Jan and take a RMD in Dec that you withhold all as taxes that will cover all your taxes you satisfied your payment... no penalty...

Take a look at 2210... line 6 asks for withholding for the YEAR... not when it happened but the total... if it is higher than the tax your are safe.... NO PENALTY...

TurboTax did all the calculations.
 
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