I am 67 year old and I am receiving social securty benefit. At the same time, I am continue working part time and recivieng some pension money. Both my employer and pension provider withholds federal tax from my payments. Do I need to request to withdraw federal tax from my social sequrity benefit?
You are not required to withhold from your social security. You do want to be sure that you are having enough withheld from your pension and employment to cover your taxes owed.
While it is not required, a good plan is to have 10% withheld from the social security for the first year to avoid not having enough withholding and facing possible penalty. If you find that you do not need the withheld funds, then you can cancel the social security withholding.
You can also use tools like Intuit Taxcaster to get an estimate of what you will owe.
Because your Social Security benefit is likely taxable, you will have to make sure that you have enough tax withheld from your total income. If you owe more than $1000 when you file your tax return, you will probably be assessed a penalty, even if you pay in full when you file your tax return. You could have money withheld from the Social Security, or you could change your withholding at your job or your pension to have more taken out from those places to make up for the taxes that you will owe on the Social Security.
Thank you for your reply!
'you will have to make sure that you have enough tax withheld from your total income'. That is my problem. I do not know how much is enough. I tried IRS tax estimator and it shows me estimated overpayment more than $1000. I do not know how accurate IRS tax estimator is.
Last year I choose 22% withholding from my SS benfit and I got about $1500 tax return. However, my total income at that time was much bigger than I have this year. I choose 12% withholding from my SS
Thanks for your reply!
Unfortunately Intuit Taxcaster only works for previous year.
There haven't been any tax law changes affecting 2021 (yet). An estimate using 2021 income with 2020 tax rules should be very close.
Thank you for your replay.
I am not sure I understand what do you mean saying 'for the first year'. First year of what? This is second year I am getting SS benefits. Did I miss something?
I did not realize that it was your second year. It does not really change anything. You need to have enough withholding to avoid a penalty. You do not have to withhold any social security.