Social Security tax withholding order - Medicare deduction happens first?

Yes, your accountant is correct. Social Security first deducts your Medicare Part B (and Part D if applicable) premiums from your monthly benefit amount. Then, if you've requested voluntary tax withholding, they calculate that percentage based on what's left AFTER the Medicare deduction. I found this out the hard way last year when I was trying to figure out why my withholding amount seemed lower than expected. The SSA representative explained the whole process when I finally got through to them.

i dont think thats right. taxes should be on the whole amout cause its all income. medicare is just a deduction but u still earned the whole amount

I had the EXACT same question last year when I started taking SS! You're smart to ask this because I didn't and it threw off my whole budget. The withholding IS applied after Medicare is taken out. For planning purposes, calculate your Medicare premium first (which keeps going up every year BTW!!!) and THEN calculate your tax withholding on what's left. I learned this the hard way and ended up with less in my bank account than I'd planned for.

To add some important context: when you request voluntary tax withholding from Social Security benefits, you're completing Form W-4V. This form allows you to choose withholding at 7%, 10%, 12%, or 22% of your benefit amount after Medicare premium deductions. This process is different from employment tax withholding calculations. Do keep in mind that depending on your total income, up to 85% of your Social Security benefits may be taxable at your regular income tax rate. The voluntary withholding helps avoid a surprise tax bill, but you should still do a complete tax projection to ensure you're withholding enough.

If you're having trouble getting through to SSA to discuss this or adjust your withholding, I'd recommend trying Claimyr. After spending days trying to reach someone at Social Security about a similar tax withholding question, I used their service and got connected to an agent within 20 minutes. They have a demo video at https://youtu.be/Z-BRbJw3puU that shows how it works. Saved me hours of frustration with busy signals and disconnections.

my neighbor told me that the whole SS benefit is taxable anyway so it doesnt matter how they calculate it youll pay the same taxes in the end

WATCH OUT for underpayment penalties too! If you don't withhold enough from your SS benefits and don't have other withholding or make estimated tax payments, you could get hit with penalties!!! I learned this the hard way my first year on SS!!!

One thing to remember is that the Medicare premium is deducted from your gross benefit amount before tax withholding is calculated, but both the full benefit amount AND the Medicare premium are reported on your SSA-1099 at the end of the year. This can be confusing when reconciling your tax documents. The Medicare premium is considered a medical expense that you've paid, even though you never actually received that money in your bank account.