Social Security tax withholding calculation: Does 22% federal tax apply before or after Medicare premium deduction?

Thank you! That's exactly what I needed to know. So I'll need to budget for a bit less each month than I was hoping. At least now I can plan accordingly.

This is correct. I work with retirees, and it's a common point of confusion. The withholding calculation is based on the gross benefit amount before any deductions. It's important to note that you can adjust your withholding percentage at any time by submitting a new W-4V form to SSA if you find that 22% is too much or too little.

I have other income sources and I'm in a higher tax bracket, so the 22% makes sense for my situation. Last year I had to write a big check to the IRS because I didn't withhold enough, so I'm trying to avoid that this time around!

Gotcha, that makes sense then! Just wanted to make sure you weren't over-withholding by mistake.

Thank you for breaking it down so clearly! This is really helpful. Do you know if state tax withholding (if applicable) would happen at the same time as the federal withholding, or does that come out at a different point?

Great question. If you've requested state tax withholding (available in some but not all states), it would be calculated and deducted at the same time as federal withholding - both are based on the gross benefit amount before any Medicare deductions.

I had the same problem trying to reach SSA about tax questions. I finally used Claimyr.com to get through to an agent without the wait. They connected me to SSA in about 15 minutes instead of the 2+ hour hold time I was experiencing before. They have a video showing how it works at https://youtu.be/Z-BRbJw3puU. Totally worth it for me because I was going crazy with the constant busy signals and disconnections.

OMG thank you!! I'll check this out - anything is better than wasting another day on hold!

This is really helpful context, thank you! Yes, I'm pretty sure I'll hit the 85% taxable threshold based on my pension and investment income, which is why I opted for the higher withholding rate. I'd rather get a small refund than have to write a big check.

Wait these numbers don't sound right... aren't the thresholds lower? I thought it was like $25k for singles not $34k?

You're partially correct. I should have been clearer. For individual filers, if your combined income is between $25,000 and $34,000, up to 50% of your benefits may be taxable. If your combined income is over $34,000, up to 85% may be taxable. For joint filers, the 50% threshold is $32,000-$44,000, and the 85% threshold is over $44,000. I've updated my previous comment to reflect this more accurately.

Thanks for the reminder! I'll keep an eye out for that form in January.

This is really valuable information, especially about being able to adjust the withholding during the year! I didn't realize it was that flexible. The tip about married couples having different withholding percentages is particularly helpful - my spouse won't be eligible for benefits for another few years, so it's good to know we can optimize this when the time comes. Do you happen to know if there are any limits on how often you can change your withholding percentage in a given year?

Rick, this is really interesting and contradicts what everyone else has been saying! Do you mind sharing which SSA office sent you those letters? I'm wondering if there might be regional differences in how this is processed, or if perhaps the system has changed recently. Your example with the withholding calculated on $3400 instead of the full $4000 would definitely make a significant difference in planning. Could you possibly share a redacted screenshot of the relevant portion of the letter? This discrepancy is concerning since so many people seem to have received different information from SSA agents.

This is really concerning - we're getting completely conflicting information here! Rick, your letter-based information directly contradicts what multiple people have shared from their personal experiences. I'm now worried about my own planning. Would it be possible for you to call out the specific document name or form number from SSA that contained this information? I want to make sure I can reference the same official source when I contact SSA myself. The difference between withholding on gross vs. net-after-Medicare could be hundreds of dollars annually for many people, so it's critical we get this right. Has anyone else received recent official documentation from SSA that can help settle this discrepancy?

This is really important information Rick, and I appreciate you sharing what your official SSA letters say! However, I'm now quite confused because this directly contradicts what I was told by an SSA representative just last month when I called about this exact issue. They specifically told me that tax withholding is calculated on the gross benefit amount before Medicare deductions. Could there possibly be different procedures for different types of benefits or different processing centers? I'm planning to start benefits soon and need to get this clarified definitively. Would you mind sharing what type of benefit this applies to (retirement, disability, etc.) and roughly what region you're in? I think we need to get to the bottom of this discrepancy since it affects real financial planning for a lot of us here.

Rick, thank you so much for sharing this official information from your SSA letters! This is exactly the kind of documentation we need to resolve this confusion. Your example makes it crystal clear - withholding calculated on $3400 after Medicare deductions rather than the full $4000 gross benefit. This would save me about $46/month compared to what I was planning for based on the other responses here. I'm definitely going to contact SSA to get my own written confirmation of this process, especially since it seems like there's been some misinformation circulating (even among SSA phone representatives). Could you tell us what the official document was called so we know what to ask for when we contact them? This could affect a lot of people's financial planning significantly.

Rick, this is incredibly helpful and I really appreciate you sharing the official documentation! This completely changes my understanding of the withholding process. Like others have mentioned, this contradicts what I've been told by multiple sources, but having it directly from SSA letters is exactly what we need. The difference between withholding on $4000 vs $3400 in your example is substantial - that's $72 less in taxes withheld per month ($408 vs $480 if calculated on the gross). I'm curious - did your letter specifically mention this was a recent change in policy, or has this always been the procedure? Also, when you mention you can now do the W-4V online, is that through the my Social Security portal? I'd love to get this sorted out before my benefits start next month. Thanks again for bringing the actual official documentation to light!

Rick, this is extremely valuable information and I really appreciate you sharing the official SSA documentation! This completely contradicts what I've been planning for based on the earlier responses in this thread. If withholding is indeed calculated AFTER Medicare deductions as your letter states, that would save me approximately $46 per month compared to what I was expecting ($209.70 Medicare premium × 22% = $46). That's over $550 annually! Given the significant discrepancy between your official letter and what others have experienced, I'm going to request my own written documentation from SSA before my benefits start next month. Could you share what the specific letter or form was called so I know exactly what to ask for? Also, do you happen to know if this represents a recent policy change, or if perhaps different types of benefits are processed differently? This kind of official clarification is exactly what this community needs - thank you for taking the time to share it!

Rick, this is absolutely crucial information and I'm so glad you shared the actual SSA documentation! This completely changes everything I thought I knew about the withholding process. Your example clearly shows withholding calculated on $3400 after Medicare deductions rather than the full $4000 - that's a huge difference for planning purposes. I have to say, it's pretty concerning that so many SSA phone representatives seem to be giving out incorrect information about this. I've been planning my budget based on withholding being calculated on the gross amount, which would have left me short each month. Could you help us out with a few details so we can all get the same official clarification? What was the specific title or form number of the letter that contained this information? And when you mention the W-4V can now be done online, is that through the my Social Security portal? This discrepancy really highlights why we need to get official written documentation rather than relying on phone conversations with SSA. Thank you for bringing the facts to light - this is going to help a lot of people plan more accurately!