How Much Tax Should I Withhold From My Social Security?

Your Social Security benefits could be subject to federal income tax depending on your total income. A portion of the benefits you receive might be considered taxable by the Internal Revenue Service (IRS). This guide explains how to determine if your benefits are taxable and the methods available to pay any tax due.

Calculating Your Taxable Social Security Benefits

To determine if you owe federal taxes on Social Security, you must calculate your “combined income.” This is the sum of your adjusted gross income (AGI), any nontaxable interest, and one-half of your total Social Security benefits for the year. Your AGI includes taxable income like wages and pensions, minus certain deductions. Your total benefits are on Form SSA-1099, sent by the Social Security Administration each January.

Once calculated, you compare your combined income to IRS thresholds, which vary by filing status. For individuals filing as single, head of household, or qualifying widow(er), if your combined income is between $25,000 and $34,000, you may have to pay tax on up to 50% of your benefits. If your combined income is more than $34,000, up to 85% of your benefits may be taxable.

For married couples filing a joint return, the thresholds are different. If your combined income is between $32,000 and $44,000, up to 50% of your benefits could be taxed. If your combined income exceeds $44,000, the taxable portion can increase to 85% of your benefits. These calculations determine the maximum taxable portion of your benefits.

Consider a single individual with an AGI of $30,000 and annual Social Security benefits of $20,000. Their combined income would be $40,000 ($30,000 AGI + $10,000 from Social Security). Since $40,000 is above the $34,000 threshold for single filers, up to 85% of their benefits would be considered for taxation.

Requesting Voluntary Withholding Using Form W-4V

If you determine that your Social Security benefits will be taxable, one way to pay the tax is to have it withheld directly from your monthly payments. This is a voluntary action you can request by using IRS Form W-4V, Voluntary Withholding Request. This form allows you to choose a specific percentage of your benefit to be withheld for federal income tax.

You can download Form W-4V directly from the IRS website. The form requires your personal information and Social Security number. The key decision is selecting a withholding rate from the only available options:

• 7%
• 10%
• 12%
• 22%

Once you have completed and signed the form, you do not send it to the IRS. Instead, you must submit it to your local Social Security Administration (SSA) office. You can find the correct office address on the SSA website and can mail or fax the completed form. After the SSA processes your request, withholding will typically begin within a few months.

Paying Through Quarterly Estimated Taxes

An alternative to voluntary withholding is to pay your tax liability through quarterly estimated tax payments. This method is often used by individuals with other income not subject to withholding, such as from self-employment. If you expect to owe at least $1,000 in tax for the year after other withholding, you are generally required to make these payments.

To calculate your estimated payments, use the worksheet with Form 1040-ES, Estimated Tax for Individuals. This form helps you project your total income and tax liability for the year, which you then divide into four equal payments. These payments are typically due on:

• April 15
• June 15
• September 15
• January 15 of the following year

The IRS offers several ways to make these payments. You can mail a check with a payment voucher from Form 1040-ES. For electronic payments, you can use IRS Direct Pay, the IRS2Go mobile app, or the Electronic Federal Tax Payment System (EFTPS).

Considering State Taxes on Social Security

Beyond federal income tax, some states also tax Social Security benefits. The rules for state-level taxation vary significantly, and what is true in one state may not apply in another.

State approaches to taxing Social Security fall into a few categories. A majority of states do not tax these benefits at all. A smaller number of states do tax Social Security, but their methods differ. Some states follow the federal rules for determining the taxable portion, while others have established their own income thresholds and exemption amounts.

Because these regulations are specific to each state and can change, you should consult the official website for your state’s department of revenue or taxation. There you will find the specific rules, income thresholds, and any necessary forms related to the taxation of Social Security benefits for your state.