Community Chat

[SeaMaiden]

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@CelticCrafter wrote:

We have the taxes deducted monthly from our SS benefits and also from my husbands pension.

I would rather do that than have to write a check to the IRS at the end of the year.

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@CelticCrafter  We do the opposite....we invest he money for the taxes all year long  and make money....then pay the taxes at the end of the year. We always come out ahead this way, rather than letting the IRS have out money all year... and make nothing....

[millieshops]

@SingingLady   I've been retired for over 2 decades now, on SS for almost 2 decades.  you can certainly have withholding from your SS if having to pay in April feels uncomfortable.  I do have some withholding, but pay a bigger share of my taxes via quarterly estimated taxes.  I have 2 goals:  to avoid a refund and to pay in enough to avoid a fine for underpaying.  

i make up any difference in April.  This year I expect to owe because the stock market returned more gains this year than I accounted for as the year went along.

The majority of taxpayers do not itemize since the standard deduction was raised significantly.  Unless you have high local taxes, mortgage loans, or deductible medical expenses, it's more likely to cost $$ than to save them.

[cotton4me]

I have taxes withheld from my Social Security income.  Right now I have the maximum amount (20%) withheld.  Will see how that works out for 2021, my first year filing single (my husband died in 2020).  I have two other pensions so I'm trying to avoid owing at year-end.  I've turned everything over to the accountant so I'm not sure of the results yet.   

[catter70]

I have 10% taken out. I'm in PA., and the state doesn't tax pensions.

[kaydee50]

Yes, DH and I both have tax withheld from our social security (mine is 12%) and our IRA distributions.  We try to get the taxes right so we don't owe money or get back more than a few hundred dollars.  Don't want a large tax bill and don't want the government to have free use of our money for a year.  Takes a bit of figuring out.

[software]

First of all kudos for having enough income to pay that much in taxes.

Next why pay taxes at all?   If you are not living on the non-SSA money, put it in something that's not taxable until you pull the money out.   You need a CPA.   The goal should be not HOW to pay taxes but how to AVOID taxes.

[Silver Lining]

@SingingLady 

I think some tax requirements might have been changed for 2021. Since you prepared the tax return yourself it might be worthwhile to have a book keeper look it over and/or redo it. Some organizatons don't charge people who are age 65 or older. If you can't find one, you could call around and get prices. You don't have to use an accountant for basically routine tax returns although you have four sources of income. Legitimate book keepers are licensed. Don't get anyone who isn't even if they seem to be good at it.

[gidgetgh]

Yes, I have taxes taken from my social security and of course it helps at tax time. 

Pay me now or pay me later. 

[moto]

I had the same worry as I just started to receive SS payments this year. Then I came to the understanding that the Social Security amount itself is not earned income that is taxed, it is other money that I might have coming in that is taxable. I am not having any taxes withheld from my SS payments yet, but may consider it once this first year is completed.
Income tax is due to the IRS based on when the earned income is received. You could still owe penalties if you wait until the end of the year to pay. It is important to pay attention to this flow of money and plan.  

Edited to add, as someone pointed out below - income from other sources when combined with your social security payments could cause your social security amount to be taxed.

[Nuttmeg]

Social Security will allow you to withold an monthly  amount from your benefit. You can find information online with a Google search for form W-4 V. Voluntary SSA tax withholdings.

I don't recommend a CPA with a simple tax. A tax program will do fine.