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View Full Version : OT: Question for retired folks - Social Security tax withholding



AD5MB
10-07-2016, 09:25 PM
retiring early in November, because my heart is trying to kill me. made the national average income plus or minus $200 all my life. what percentage should I have deducted from my Social Security to insure I don't owe them?

options are 7.5, 10, 15 and 25 percent.

Bob Fisher
10-07-2016, 09:33 PM
Just make sure that YOU owe THEM. The IRS is the poorest savings account available. Ideally, try to owe them one dollar. Bob.

SGW
10-07-2016, 09:40 PM
There is no way for anyone to know without your complete financial picture, but you might try this. On last year's taxes, get the figure from line 22 (your total income). Then get the figure from line 63 (your total tax). Divide line 63 by line 22. That will give you the percent of income you paid in in taxes. If you use that figure as the percentage to deduct, you should be approximately correct, assuming other aspects of your finances (e.g. eligible deductions) don't change significantly.

Paul Alciatore
10-07-2016, 10:41 PM
As said above, there is no way for us to know exactly what your taxes would be. I have been retired for about 5 years and, except for the first year when I had a partial year of salary, my taxes have been zero. So I do not have them deduct anything that I have a choice over.

But for you, the situation could be different. I use an on-line tax service: Tax Act. Their service can be very inexpensive or even free. I do pay around $10 to $20 per year for some of the options each year. I feel it is worth it. They have year-round services that include ways to predict your taxes as the year progresses. You can use that to get a very good estimate of what you may owe.

I am not any kind of tax professional, but I can tell you this, if you only owe a few hundred dollars OR if your withheld amount is within a reasonable percentage of the amount owed, then the IRS will nor expect you to pay any penalty or any interest. In the past I have had years where I owed several thousand dollars and there was none of that. Of course, I did have many more thousands withheld in those years so the amount owed was only a percentage of that due. And I paid it promptly while filing the return.

I strongly suggest that you avail yourself of the Tax Act service or of one of the others that probably have similar, year round tools for predicting your taxes. Another thing, withholding is not the only way to pay your estimated taxes. You can make quarterly payments of the estimated tax if you do not have an employer to take the deductions out of a paycheck. That's only four times a year. And each one is calculated at the time of the payment so they are not necessarily all the same.

One more thing: even if you have a small business or farm income, the Tax Act system will handle that and most other common situations. I suspect you need to be in the multi-millionaire group to need a better system. They also have help available but I have not had to use it.

Guido
10-07-2016, 10:44 PM
Bob and SGW are on target.


Wife and I did not mark proper 'X' somewhere along the line, upon retirement and our electing to take SS starting at age 62,. Been paying 28 bucks every month in penalty, for not signing up on time for Part D insurance, which covers prescription drugs. Now, 21 years later, good health and no high priced drugs, but we're covered. lol

Visit with an insurance guru (at work?) for update skinny.

--G

danlb
10-07-2016, 11:19 PM
It's really easy. Get a tax form online from the IRS. Fill it out using the figures based on what you expect to have as income. That will give you your expected tax liability and will do so very accurately. You don't need exact numbers for this exercise, you just need to be in the ballpark.

If you find that you will owe 2000 on an income of 20,000 then you select the 10% option. Adjust to fit your situation.

lugnut
10-08-2016, 03:30 AM
I think you need to give Trump a call. :cool:

danlb
10-08-2016, 12:33 PM
There is no way for anyone to know without your complete financial picture, but you might try this. On last year's taxes, get the figure from line 22 (your total income). Then get the figure from line 63 (your total tax). Divide line 63 by line 22. That will give you the percent of income you paid in in taxes. If you use that figure as the percentage to deduct, you should be approximately correct, assuming other aspects of your finances (e.g. eligible deductions) don't change significantly.

You can't use last years taxes as a guide. When you retire a lot of things change, not the least of which is your income. Your expenses and deductions may also change.

When I retired our yearly income dropped by 80% BUT the first year's tax return covered half a year of salary and half a year with just social security.


Don't forget, lower income also means a lower tax rate. Social Security payments are not taxed federally if you have no other income. It may be partially subject to normal tax rates if you have other income.

Dan

JRouche
10-08-2016, 04:09 PM
I am retired, did it at 43. I didnt pay into SS so I dont pull from it. My work had its own retirement program. So,,,, I asked my Mom, who is 72.

She said she pays about 6% in taxes for SS. Its only fed, no state. Depending on your age and other tax deductions your amount will vary.

A CPA or similar would be able to help you much more than we could... JR

Juiceclone
10-08-2016, 05:25 PM
if there's one nearby, to to a SS office and (wait in line) and ask them. I found the person i talked to very knowledgeable and had some surprising answers. hey...it's their job!!

AD5MB
10-08-2016, 09:41 PM
if there's one nearby, to an SS office and (wait in line) and ask them.

done did that, for another matter. they open at 9, I got there at 9:36

two and a half hour wait. I had number 9, they called 10 ten minutes after I got there. Then 257, 400, 360, X936, S432, bunch of other numbers, then 7, 9, and 11

wlpier
10-09-2016, 03:19 PM
You know there a lot of variables on that. I downloaded the form from SS and if I remember it was preset set for 10% (they must know something) all the others were write in’s. Well, based on what I owed them for the previous year (no deductions) I figured that 10% was about right. The bad part is that you have to take the form to the SS office, no online deductions. A place that needs an armed guard to let you in just doesn’t sit right with me. You wonder what kind of wackos wander in… But if you’re just dropping off the form you can put it in an envelope and drop it in their mail box and leave. So it wasn't that bad.

AD5MB
10-09-2016, 06:04 PM
A place that needs an armed guard to let you in just doesn’t sit right with me.

... and cubicles enclosed in bulletproof glass. must be a lot of rage episodes in there

steel toed boots and defibrillators set off the metal betectors