How do I file to take an exemption on income from a part time job since I receive social security benefits and have no tax liability on the benefits?

[edlenk62]

I am over 65. Every year that I have received social security benefits and filed my 1040 with just the retirement amount I have calculated no tax liability on the benefits. In 2016 I will have a small amount of wages from this part time job added as income to the retirement benefits I receive. How do I declare an exemption on the W4?

[Carl]

When Social Security is the only source of income for your entire household, no tax return needs to even be filed at all. But when you have other income, such as your part time income in 2015, and that income is more than $6200, then a tax return is required to be filed.

If the taxable income reported to you on a W-2 is less than $6200, then a tax return does not need to be filed. HOWEVER, if any taxes were withheld on those earnings, then you should file a tax return anyway so those withheld taxes can be refunded to you.

If you have income of over $400 that is reported to you on a 1099-MISC in box 3 or 7, and/or self-employment income, then you are required to file a tax return.

For either scenario above, you will also report your SS income. Generally, the SS income will still not be taxable provided your earned income is below a certain thresh hold as identified at https://www.ssa.gov/planners/taxes.html

[Critter]

On a W-4 I highly recommend NOT claiming EXEMPT ... if you don't want taxes withheld then claim 10 allowances on line 5 ( 99 allowances is not allowed ... any over 10 requires the employer to file extra forms with the IRS which they don't like to do).

[Carl]

Isn't that what box 7 is for on the W-4?

[Critter]

Exemption from Withholding

If an employee qualifies, he or she can also use Form W-4  to tell you not to deduct any federal income tax from his or her wages. To qualify for this exempt status, the employee must have had no tax liability for the previous year and must expect to have no tax liability for the current year.

If the employee does have a tax liability for the tax year (even if they get a refund) they could be subject to fines for claiming exempt.  An employee may be subject to a $500 penalty if he or she submits, with no reasonable basis, a Form W-4 that results in less tax being withheld than is required.

Maximum Allowances

In the past, employers had to send the W-4 of any employee claiming more than 10 allowances in to the IRS, to make sure that the employee was having enough income tax withheld. Now, the IRS is using its own data more, making this unnecessary. The IRS will send notification to your employer if you are only allowed to claim a certain number of allowances. Absent this, you may claim any number of allowances you like.

Maximum Exemptions

You may claim the number of exemptions on your tax return that you are legally entitled to. This is generally one exemption for you and one for your spouse if you are filing a joint return. You may also claim one exemption for each of your dependents who you are qualified to claim. You need to list the Social Security number of each dependent, to ensure that you are not claiming dependents fraudulently.

Calculating Allowances

Form W-4 contains worksheets to assist you in claiming the correct amount of allowances, so that you have the correct amount of tax withheld. You can account for all of your dependents on these forms, as well as the amount of your projected itemized deductions and tax credits that you are eligible for. Choose the amount of allowances that you claim carefully, as being over-withheld means you give the IRS a free loan, and under-withholding may result in penalties.

[kasribble]

Thanks!  I was not aware of some of the information you provided.  I appreciate your posting this!

[kasribble]

I hope I understand what you are asking.  If you want to have taxes taken out of your part time job because you are afraid you will have enough earned income to actually have to pay tax on it then you claim Single or Married (whichever applies and the amount of dependents that you claim.  Single 0 dependents will take out the most taxes from your paycheck.  If you don't want them to take any money out (other than Social Security and Medicare) then you can write the word "exempt" in the area where you would put the number of dependents. Another option is to use 99 as your amount of dependents.  Make sure you let your company know to do the same thing for your state taxes if applicable.  Let me know if I mis-read your question.

[Chlotrich]

I work P/T n recvd Ssdi can I be extent ?

[Chlotrich]

Ok

[Hal_Al]

The circumstances you describe  (receiving SS benefits and only working part time) does not make you exempt from withholding. This is true whether your SS benefit are from retirement or disability. 

What makes you exempt is if you had no tax liability last year, and expect to have no tax liability this year. That is, you expect to make less than $12,000 from your part time job.

[Jonatha50]

I am on SS and have just taken a part time job. Do I include my SS wages ? How do I fill out W4 ? I can’t find answers.

[DoninGA]

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@Jonatha50 wrote:

I am on SS and have just taken a part time job. Do I include my SS wages ? How do I fill out W4 ? I can’t find answers.

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You have to report all of your income on tax return.  You report the Social Security benefits received from your Form SSA-1099 and from the W-2 for your wages.

For assistance in completing a W-4 that you give to your employer go to this IRS website for a tax withholding estimator - https://www.irs.gov/individuals/tax-withholding-estimator

Up to 85% of Social Security Retirement/Disability/Survivors benefits becomes taxable when all your other income plus 1/2 your social security reaches:

• Married Filing Jointly - $32,000
• Single or Head of Household - $25,000
• Married Filing Separately - 0

[xmasbaby0]

TAX ON SOCIAL SECURITY

Up to 85% of your Social Security benefits can be taxable on your federal tax return.  There is no age limit for having to pay taxes on Social Security benefits if you have other sources of income along with the SS benefits.  When you have other income such as earnings from continuing to work, investment income, pensions, etc. up to 85% of your SS can be taxable. 

 What confuses people about this is that before you reach full retirement age, if you continue working while drawing SS, your benefits can be reduced if you earn over a certain limit. (For 2017 that limit was $16,920 —for 2018 it was $17,040—for 2019 it was $17,640— for 2020 it is $18,240; for 2021 it is $18,960,  (For 2022 it will be $19,560) 

After full retirement age, no matter how much you continue to earn, your benefits are not reduced by your earnings; your employer will still have to withhold for Social Security and Medicare.

To see how much of your Social Security was taxable, look at lines 6a and 6b of your 2021 Form 1040

https://ttlc.intuit.com/questions/1899144-is-my-social-security-income-taxable

https://www.irs.gov/help/ita/are-my-social-security-or-railroad-retirement-tier-i-benefits-taxable

You need to file a federal return if half your Social Security plus your other income is $25,000 when filing single or head of household, or $32,000 when filing married filing jointly, $0 if you are filing married filing separately.

Some additional information:  There are 13 states that tax Social Security—Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont, and West Virginia.  These states offer varying degrees of income exemptions, but four mirror the federal tax schedule: MN, ND,VT, and WV

[Hal_Al]

Q. I am on SS and have just taken a part time job. Do I include my SS wages ? How do I fill out W4 ?

A. You ignore the SS and fill out the W-4 normally. See above for whether you qualify to claim "exempt".