Community Chat

[Laneysmom]

My suggestion to any senior collecting Social Security and having other income and investments is to consult a Senior Law and tax specialist. It is likely that you will benefit significantly by having your assets in a Trust account. Not only will it benefit you, but it will benefit your beneficiaries when you die. In many incidences it will prevent them from having to pay a major portion of inheritiance taxes. 

[Carmie]

My husband and I both have Federal taxes taken from our SS checks.  We also have Federal taxes taken from both of his retirement checks as well as my retirement check.

We always get a refund that we use to pay our Real Estate and School taxes.

When we worked, we always owed.  I don't want to do that anymore.

Many people think SS and retirement money is not taxed.  It is if you make over a certain amount.  It is better to have it taken out....less stressful.

[CelticCrafter]

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@moto wrote:

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.  

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Social Security benefits are indeed taxable.

• Up to 85% of Social Security benefits are taxable for an individual with a combined gross income of at least $34,000 or a couple filing jointly with a combined gross income of at least $44,000.

[On It]

One suggestion would be to use a savings account. Each time you receive your SS make a deposit in the amount to cover your tax bill into that savings account. You may even want to overcharge yourself a bit. At the end of the year you will have the money in your possession, pay what you owe, and enjoy the leftover funds.

The IRS staff was reduced over the last several years, and there are not enough employees to process claims quickly. There will be delays until new people can be hired and trained. Following the savings idea gives you total control over your money, and you are not at the mercy of having to wait for it.

My husband and I use a CPA, and we do owe money every year on our income tax. By the way, we do the same practice to have the money saved to buy a new car. Each month we pay a "car payment" into our savings account. When we need a car, it is there ready and available for our next vehicle.

[ladyann45]

I would suggest that you contact Social Security office near you and have federal taxes withheld out of each your Social Security

benefits. Most people who have additional retirement or other income don't realize that until it is to late. The last change in the income tax eliminated a lot of your deductions because of the doubling of the filing status. I would suggest that you look at all of your sources of income and increase your federal withholdings based on your need so you will not be owing as much this time next year. I am a tax preparer and I hope this will help you.

[ladyann45]

I would suggest a tax planner or a financial adviser who deals with that, CPA's are accountants and most of them are not tax preparers because of the rules put in place.

Most tax preparers have to have continued education and they also have to take an exam just like enroll agents. I prefer the tax adviser because they can help you plan all of your finanaces before you retire.

[gnomie1]

CPA here - (at the office preparing tax returns right now, stopped for a quick lunch break at 3:30pm and saw this question)

A couple of suggestions:

1) depending on your tax bracket and the amount of taxes owed, it may be necessary to either have federal income tax withheld from your SS/pensions or pay quarterly estimated tax payments. If you wait to pay the balance with the filing of your tax return you may get hit with underpayment penalties and interest.

2) while the consumer tax preparation software will prepare an accurate tax return, just be aware that the results are always in the favor of the IRS and not the taxpayer(s). Professionals know the tax rules and laws inside and out and how to achieve the lowest legal liability, something that software is unable to do. Our favorite new clients are those that come from H&R Block because not only are our fees lower, we generally find some type of tax savings - these are our happiest clients who recommend us to others.

3) if you do not want to seek the assistance of a professional, during tax season AARP and many local senior citizen organizations offer free tax preparation clinics - each year our office sends four accountants (myself included) who work gratis, working every Sunday during the month of March. Just be aware, unless the clinics are staffed with retired accountants, they generally are open on the weekends and evenings to accomondate the working hours of the accountants. About 30% of the people who visit us at the clinics just want us to review the tax return and determine if any changes should be made.

4) if you decide to seek the services of a professional, I strongly discourage finding someone solely from their advertsing - it is always best to get recommendations from people whom you trust.

I hope this helps you out.

[fairydogmother]

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@Nuttmeg wrote:

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. 

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I used turbo tax

[Kachina624]

If a person is of average intelligence, can read, write and follow instructions, and does not itemize and has nothing to deduct, I feel its ridiculous for him to pay a preparer $200-300 to complete a return.  There are many excellent programs online which, for a much smaller fee, will take you through the process painlessly.

[fairydogmother]

@gnomie1  Fantastic! 😊 thank you so much!