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 principle 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.

 

[amcnj]

Also keep in mind that if you do determine you will need additional withholding due to now collecting social Security, any additional amount does not have to be withheld from social security itself. You could instead up the withholding from other sources of income (work, pensions…).

 

[georgina]

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.

All quarterly estimated here too, as our income varies some year to year (and I itemize every other year which changes things). I pay estimated based on the previous year's total tax to be safe

 

[tvguy]

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.

Well, our CPA said to have nothing withheld from Social Security for the first full year my wife and I both were on Social Security to see how things work out. 2025 was that year. We have a small annuity payment, $1,200 a month and the company it is held by automatically does withholding on that. 20% Feds, 5 % State. Got our taxes done. $2,900 withheld Fed and State Tax on the annuity. $1,900 refund combined from Feds and State. So no reason to do withholding on Social Security.

 

[_19disnA]

If you (and/or your spouse, where applicable) are both retired and have no other part time employment, besides SS the only other common source of income would be from any investments you have (interest/dividends) as well as any pension (also if applicable) which get reported annually to you by the firm managing those accounts. If you had a 401k account from your job, at a certain age there are requirements for how much needs to be withdrawn which would add to your income and tax liability. In the OP's example, SS payments will only be for part of the year, while in future years will be paid for all 12 months.

Have used both TuboTax & H&R Block tax software over the years and both are very easy to use. You simply 'fill in the blanks' for various required inputs and it determines whether you get a refund or owe additional tax.

 

[wabbott]

All quarterly estimated here too, as our income varies some year to year (and I itemize every other year which changes things). I pay estimated based on the previous year's total tax to be safe

If your estimated income at the end of the tax year is different from what you originally estimated, you can vary the amount paid on your quarter 4 payment that is due January 15 of the following year.

We have had this happen several times, as we have a mutual fund that doesn't declare its capital gains until about Thanksgiving. We make our best estimate when we use the forecast spreadsheet early in the tax year, but it's never exact. This year, we got close, and are expecting a refund of about $100.

The target is to reach zero owed or zero refund due. That means you've paid all that's legally owed, and they didn't have use of your money for several months.

https://www.irs.gov/taxtopics/tc306...mated,using the annualized installment method.

Generally, taxpayers should make estimated tax payments in four equal amounts to avoid a penalty. However, if you receive income unevenly during the year, you may be able to vary the amounts of the payments to avoid or lower the penalty by using the annualized installment method.

 

[tvguy]

My mom was retired and drawing Social Security for 28 years. 27 of those years she paid and owed nothing in Federal and State income taxes. She used a tax loophole to reduce her RMD from her IRA. That loophole has long been closed. Thanks Congress.
I know of at least one person who is about 10 years old than me that claims she has had no income tax liability in a decade. But she is living on a lot less than I am.