Withholding Income Tax on Social Security Benefits

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Withholding Income Tax on Social Security Benefits

 

One of the topics that will need to be discussed when a person files a claim to begin collecting Social Security benefits is whether to have any federal income tax withheld. Depending on a person’s tax situation, they may need to have federal income tax withheld from their Social Security benefits in order to cover the amount of taxes they will owe in to the IRS at the end of the tax year.

Federal income tax withholding can be elected on the original claim form for Social Security benefits. The options on this form are percentages of 7%, 10%, 12%, or 22%, they do not accept flat dollar amounts for withholding on Social Security benefits. In order to change the amount of federal income tax withheld a form W-4V needs to be completed. Once the form is completed, it should be signed and returned to the local Social Security office by mail or in person. In order to decide the best withholding percentage for your personal tax situation, it is best to contact your accountant to assist you.

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