How much is deducted from Social Security payment - taxes withheld before or after receiving check?
I'm planning for retirement next year and trying to budget accurately. When I look at my Personalized Monthly Retirement Benefit Estimate on the SSA website, I'm confused about whether that's the actual amount I'll receive in my bank account. Do they withhold federal taxes before depositing, or do I get the full amount and pay taxes later when filing? I know Medicare Part B premiums (currently around $170/month) get deducted once I turn 65, but what about income taxes? And are there any other standard deductions I should know about? My FRA is 67 but I'm planning to claim at 66 if that matters for the tax situation.
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QuantumQuasar
Taxes aren't automatically withheld from your Social Security benefits unless you specifically request it. The amount shown on your benefit estimate is the gross amount before any deductions. You have options: 1. Receive full amount and pay taxes quarterly or annually 2. File Form W-4V to request voluntary tax withholding (at 7%, 10%, 12%, or 22%) 3. Have Medicare Part B premium deducted (and Part D if applicable) Other possible deductions include Medicare Advantage premiums, any garnishments for things like unpaid federal taxes, child support, or student loans. Also, depending on your combined income, up to 85% of your benefits may be taxable.
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Miguel Ramos
•Thank you! This is really helpful. Do most people opt for the voluntary withholding or just pay quarterly? I've never done quarterly payments before and it sounds complicated.
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Zainab Omar
my wife gets hers with 10% taken out for taxes and it works good for us. the medicare comes out too. better than owing a big bill at tax time!!
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Miguel Ramos
•Thanks for sharing your experience! That's a good point about avoiding a big tax bill. Does the 10% withholding usually cover all your tax liability or do you still end up owing some at tax time?
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Connor Gallagher
Keep in mind that whether your SS benefits are taxed depends on your "combined income" - which is your adjusted gross income + nontaxable interest + 1/2 of Social Security benefits. If filing single and combined income is: - Below $25,000: No tax on benefits - $25,000-$34,000: Up to 50% taxable - Above $34,000: Up to 85% taxable For married filing jointly, the thresholds are $32,000 and $44,000. If you have other income sources in retirement, you'll likely need to pay some tax on your SS benefits. The W-4V form lets you choose 7%, 10%, 12% or 22% withholding rates.
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Yara Sayegh
•Not true at ALL!!!! I worked for 45 YEARS and now the goverment takes almost a THIRD of my SS check for taxes!!!!! Its HIGHWAY ROBBERY to tax money we paid into the system our whole lives!!!!!
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Keisha Johnson
I see some confusion about tax withholding from Social Security benefits. Let me clarify: 1. The benefit amount shown on your statement is the gross amount before ANY deductions 2. Federal tax withholding is OPTIONAL - you must request it by submitting Form W-4V 3. Medicare Part B premium (currently $174.70/month for most people in 2023) is automatically deducted when you enroll in Medicare 4. If you have higher income ($97,000+ for individuals), you'll pay extra for Medicare (IRMAA surcharges) 5. Some states also tax Social Security benefits For accurate planning, estimate your total retirement income, determine what percentage might be taxable, then decide if voluntary withholding makes sense for your situation.
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Miguel Ramos
•This is so comprehensive, thank you! I didn't even think about state taxes - I'm in Illinois which I believe doesn't tax SS benefits, but I should double-check. Are IRMAA surcharges only for high-income earners? I'll be well below $97,000 in retirement.
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Paolo Longo
Just wondering - has anyone successfully reached SSA to ask these kinds of tax questions? I've been trying for WEEKS and can't get through to anyone who can help with my withholding form.
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Connor Gallagher
•I was in the same boat trying to reach someone about my Medicare IRMAA appeal. After being on hold for hours and getting disconnected multiple times, I tried Claimyr.com and was able to get through to an agent in about 20 minutes. They have a service that navigates the phone system for you and calls you back when an agent is on the line. Here's a video showing how it works: https://youtu.be/Z-BRbJw3puU It saved me so much frustration, especially since I had already wasted days trying to get through on my own.
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CosmicCowboy
Just want to add something important that others haven't mentioned - if you're still working when you claim Social Security at 66 (before your FRA of 67), you'll be subject to the earnings limit. For 2023, that's $21,240 annually. They'll deduct $1 for every $2 you earn above that limit, which is a significant reduction that will show up as a deduction from your monthly payment. This is separate from the tax issue but important for accurate budgeting.
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Miguel Ramos
•Oh wow, I hadn't considered that! I was planning to work part-time for the first year after claiming at 66. So if I earn, say, $30,000 that year, they would deduct about $4,380 from my annual benefits? That's definitely going to affect my budget plans.
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Yara Sayegh
i was SHOCKED when i started getting ss and saw all the deductions!! nobody tells you this stuff beforehand!! between medicare and the tax withholding i chose, i get WAAAY less than what my statement said. budget accordingly!!!!
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QuantumQuasar
•This is why financial planning for retirement is so important. The SSA could definitely do a better job explaining potential deductions in their benefit estimates. I recommend everyone create a spreadsheet with your expected SS benefit, then subtract estimated Medicare premiums, tax withholding (if elected), and any other deductions to get a realistic take-home amount.
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Zainab Omar
my brother just turned 66 and he didn't do the withholding thing and now owes a big tax bill he can't pay. definitely do the withholding!!!
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Keisha Johnson
•This is a common situation. For anyone facing an unexpected tax bill on Social Security benefits, the IRS does offer payment plans. You can set up an installment agreement online if you owe less than $50,000. The important thing is to file your tax return on time even if you can't pay in full.
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