Social security payments and taxes

[leebee]

I've filed to start collecting my Social Security payments even though I'm still working through October (I'll be 70 in July... it's time). How do you decide how much to have withheld for federal taxes? Is there an option for having state taxes withheld? (DH and I had a combined taxable income of around $100K for 2025, I earn about 40% of our income, if that helps with an answer.)

 

[wabbott]

https://sites.google.com/view/incometaxspreadsheet/home/download

Here is a homemade spreadsheet I've been using for years, ever since I got tired of TurboTax's nickel and dime price hikes every year. The author is a retired nuclear engineer who got bored and decided to do something with his time. It's free, but he accepts donations.

If you're halfway proficient with excel, it's a snap to use. In our case (we're also retired), we have NO withholding done, either for federal or state. We make quarterly payments - 4/15, 6/15, 9/15 & 1/15. All the necessary forms and instructions are at your state's tax website and the IRS website.

 

[lanejudy]

DH collects social security retirement but I am still working full time. We don’t have anything extra withheld from his SSA payment, but I may have adjusted the withholding from my paycheck. I know that I increased my 401K contribution since his SSA was essentially additional income, allowing me to save more from my check; that may have offset the need for additional withholding. (SSA is taxable in my state so we had to consider that as well.)

 

[sam_gordon]

we have NO withholding done, either for federal or state. We make quarterly payments - 4/15, 6/15, 9/15 & 1/15.

I'm curious... why? I would have thought, SS being a "fixed" amount, it would be pretty easy to figure out how much should be withheld.

 

[soccerdad72]

I'm curious... why? I would have thought, SS being a "fixed" amount, it would be pretty easy to figure out how much should be withheld.

It would depend on other income streams (e.g. interest, dividends, part time work, RMAs, etc.). If SS payments are someone's only income, then it's an easy calculation, but that's rarely the case.

 

[wabbott]

I'm curious... why? I would have thought, SS being a "fixed" amount, it would be pretty easy to figure out how much should be withheld.

A legit question. I want to know how much I pay in taxes, and FEEL it by actually writing a check. Having it witheld tends to mask the effect. It's a principal thing with me.

 

[sam_gordon]

A legit question. I want to know how much I pay in taxes, and FEEL it by actually writing a check. Having it witheld tends to mask the effect. It's a principal thing with me.

Fair enough. I appreciate the response!

 

[Miffy]

I'm not an accountant. This is just my personal opinion, based on my experience. Start off having the maximum in federal taxes withheld--22%. When you file your taxes next year, you'll see if that was about right or if you were overwithheld.

It's easy to change the federal tax withholding amount. Your other choices are 12%, 10%, and 7%. You can adjust every year if you need to or want to.

If you don't care if you might have to pay taxes next year, then start off having 7% withheld and go up from there, if necessary.

As for state taxes, no, you cannot have them withheld from your social security, however, @leebee, I think you live in Maine. Yes? If so, Maine doesn't tax social security.

The only states that do tax social security: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont.

 

[focusondisney]

I've filed to start collecting my Social Security payments even though I'm still working through October (I'll be 70 in July... it's time). How do you decide how much to have withheld for federal taxes? Is there an option for having state taxes withheld? (DH and I had a combined taxable income of around $100K for 2025, I earn about 40% of our income, if that helps with an answer.)

A longtime friend of my husband’s is an accountant & has been doing our taxes for most of our marriage. We discussed our anticipated income with him as we each retired & he has been able to advise us on what he anticipated our taxes would be. The first year we were both retired I had misunderstood his advise & had waaay too much withheld. The huge refund was nice, but I quickly adjusted our withholding to the appropriate amount. In January our financial agent advised we start drawing from an annuity soon, we waited to discuss & plan for tax implications with our friend before agreeing. Our accountant friend was also able to project out a few years so we could make an educated decision & anticipate future plans. We don’t have the knowledge to make decisions without some professional guidance.

If you go the do it yourself route, make sure you stay up to date with your state information re: pension/ retirement account/ SS taxes. States can be different on what or how much is taxed. We have no state tax due on our current income. We chose to have federal taxes withheld from husbands SS. We’re used to having withholding from our checks our whole working life. I was not about to start worrying about how much or when to pay at this stage of life.

 

[thanxfornoticin]

If you're halfway proficient with excel, it's a snap to use. In our case (we're also retired), we have NO withholding done, either for federal or state. We make quarterly payments - 4/15, 6/15, 9/15 & 1/15. All the necessary forms and instructions are at your state's tax website and the IRS website.

This is us, too. It's much easier to control the 'withholding' payments this way, and avoid tax penalties at the end of the year. It gets tougher to predict withholding amounts properly when looking at SS payments, a pension, bank interest. and taxable distributions from retirement accounts. So we control it ourselves by making the quarterly payments instead. It's not for everyone, but works best for us.

 

[leebee]

I'm not an accountant. This is just my personal opinion, based on my experience. Start off having the maximum in federal taxes withheld--22%. When you file your taxes next year, you'll see if that was about right or if you were overwithheld.

It's easy to change the federal tax withholding amount. Your other choices are 12%, 10%, and 7%. You can adjust every year if you need to or want to.

If you don't care if you might have to pay taxes next year, then start off having 7% withheld and go up from there, if necessary.

As for state taxes, no, you cannot have them withheld from your social security, however, @leebee, I think you live in Maine. Yes? If so, Maine doesn't tax social security.

The only states that do tax social security: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont.

Yes, I live in Maine! Wahoo, one less thing to worry about! Thanks, @Miffy !!

 

[Mouse Tracker]

I'm not a CPA, You may want to talk with one.

Have you reached full retirement age? If so, there is no limits to earned income and SSI is not affected. I would continue with using whatever the withholding amount is based on your filing status ( married / jointly). You get an additional senior deduction ($6000) until 2028.

 

[China Expat]

I have 22% withheld and with our combined total incomes, we got a tax refund for the first time in 20 years!

 

[karomy776]

I've filed to start collecting my Social Security payments even though I'm still working through October (I'll be 70 in July... it's time). How do you decide how much to have withheld for federal taxes? Is there an option for having state taxes withheld? (DH and I had a combined taxable income of around $100K for 2025, I earn about 40% of our income, if that helps with an answer.)

Congrats on starting your payments! With a combined income around $100k, a good chunk of your benefits will likely be taxable. It’s a bit of a balancing act, but starting with a small percentage withheld is a solid way to manage it.