Social security

Hi Emarti9,

Thank you for your questions! 
Since Social Security is means tested, 85% is the maximum amount of social security can be taxed. When your income exceeds $34,000, The tax on social security begans. If you expect your income to exceed this amount, you should consider having taxes withheld from your social security. 

Also remember that social security has no age limit! That means that as long as your income exceeds a certain amount, as indicated above, social security will be taxed.

You may have taxes withdrawn from your account at this address: https://www.ssa.gov/manage-benefits/request-withhold-taxes

Have a Great Day!!!

Well first of all CONGRATS on retirement and earning your full benefit on your own!! Well done!!

Now for your question. The amount of tax created by your social security income is dependent upon your other income. During this first year of transition, it appears you might have more social security income than in prior years. If you look at your 2021 tax return, you will see the amount of taxable income you had from other sources. You would add that number to your new social security income (for half the year, since the increase started mid-year) and this will determine how much of your new social security income is subject to tax. Here is a good article for you to review.

https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-income/receiving-social-security-affect-taxes/L1IFvD7RR_US_en_US?uid=lkjxvydq

I guess my final comment would be to not worry about whether you have 100% predicted your taxes. the stress of that is not good for anyone. Enjoy your new life and if you want to budget for some additional tax, you can have 10% of your social security withheld for taxes. and then you can get on with enjoying your life.

Kelly C, CPA

Congrats on social security planning that you are taking your own benefits at age 70.

Social Security taxability can be up to 85% depending on your other income. 

Recommend TurboTax Tax Calculator: https://turbotax.intuit.com/tax-tools/calculators/taxcaster/ 

There are many ways to send in tax payments for tax year 2023.

You can use W-4V to withhold tax from social security payment.

https://www.irs.gov/forms-pubs/about-form-w-4-v 

Or send in estimated tax payments.

https://www.irs.gov/forms-pubs/about-form-1040-es by mail in vouchers or use IRS Direct Pay.

https://www.irs.gov/payments/direct-pay 

How to limit your tax liability overall -

If you are still working - maximize all employer provided pre-tax benefits, such as 401K, Health Saving account; Delay pretax retirement withdrawals and any other to reduce your other income.

Hope the above helps. Thank you much for posting questions.

Whether or not your Social Security benefits are taxable depends on what other income you report on your tax return.

In order to calculate how much of your Social Security benefits are taxable, add 1/2 half of your benefits to the total of all of your other income, including tax-exempt interest. If this amount is greater than the base amount for your filing status, then some portion of your benefits will be taxable. The base amounts are as follows:

Single, Head of Household and Qualifying Surving Spouse - $25,000;

Married, filing separately (if you lived apart from your spouse for the entire year) - $25,000;

Married, filing jointly - $32,000; and

Married, filing separately - $0.

"Generally, you can figure the taxable amount of the benefits in Are My Social Security or Railroad Retirement Tier I Benefits Taxable?, on a worksheet in the Instructions for Form 1040 (and Form 1040-SR) or in Publication 915, Social Security and Equivalent Railroad Retirement Benefits. However, if you made contributions to a traditional Individual Retirement Arrangement (IRA) for 2022 and you or your spouse were covered by a retirement plan at work or through self-employment, use the worksheets in Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs), to see if any of your social security benefits are taxable and to figure your IRA deduction." (Note: Right click on the links above and open the link in a new page.)

I obtained the above information from the Internal Revenue Service website at the following link (Note: Copy the below link and paste it in a new browser page.) The above information is included in the first Frequently Asked Questions.

https://www.irs.gov/faqs/social-security-income

Per the information included on the Internal Revenue Service website at https://www.irs.gov/newsroom/irs-reminds-taxpayers-their-social-security-benefits-may-be-taxable, you may incur income tax on 50% of your benefits when your base income, calculated per above, is 

• Filing single, head of household or qualifying widow or widower with $25,000 to $34,000 income.
• Married filing separately and lived apart from their spouse for all of the tax year with $25,000 to $34,000 income.
• Married filing jointly with $32,000 to $44,000 income.

You may incur income tax on 85% of your benefits when your base income, calculated per above, is 

• Filing single, head of household or qualifying widow or widower with more than $34,000 income.
• Married filing jointly with more than $44,000 income.
• Married filing separately and lived apart from their spouse for all of the tax year with more than $34,000 income.
• Married filing separately and lived with their spouse at any time during the tax year.