The same method you use to avoid owing taxes on employment income come Tax Day can be used to avoid owing taxes on Social Security income.
That's right - you just have them take money out of your check.
It might seem weird to tell one arm of the federal government to withhold money from your benefits so that another arm doesn't try to grab it from you. But there's an IRS form for this purpose.
It's called a W-4V, or Voluntary Withholding Request. It works much like a regular W-4, the form that employees use to choose or change how much of their paycheck is withheld for federal income taxes.
Many Social Security recipients are not taxed on their benefits, as we explain in 5 Ways to Avoid Taxes on Social Security Income.- If you are one of them, owing taxes on your benefits is likely not a concern for you.
However, retirees who end up owing money to Uncle Sam at tax time - rather than receiving a refund - might want to consider filling out a W-4V. It can spare you from an unpleasant surprise at tax time.
As we reported in How Retirees Can Avoid a Surprise Federal Tax Penalty in 2019:
Income received by retirees can be taxable in certain situations. And any taxpayer who withholds too little of their income for federal taxes generally risks incurring a larger tax bill than expected - and possibly a penalty for not paying taxes when due - next spring.-
It's now too late to change your 2019 Social Security withholding to avoid owing taxes on your benefits this year. But it's not too late to change your 2020 withholding to avoid owing Uncle Sam next tax season.See Also:14 Products That Keep Foods Fresh Longer
How to submit a Form W-4V
Form W-4V allows you to start having part of your Social Security retirement benefits withheld for federal income taxes, or to change the amount that is currently being withheld.
The only catch is that the feds are particular about how much you withhold.
You can have 7, 10, 12 or 22 percent of your monthly benefit withheld for taxes,- says the Social Security Administration. Only these percentages can be withheld. Flat dollar amounts are not accepted.-
You can download a W-4V from the IRS website, or call the IRS at 800-829-3676 to request one. If you are deaf or hard of hearing, you can call the IRS teletypewriter (TTY) number, 800-829-4059.
Submit the completed form to your local Social Security office, either by mail or in person. (Note: As of publication time, Social Security offices are closed for in-person assistance due to the coronavirus pandemic.)
How to check your Social Security withholding
If you are unsure whether or how much money is currently being withheld from your Social Security retirement benefits, check your benefit statement.
It will tell you how much you received in benefits and how much was withheld, if any. You can view a sample benefit statement, technically known as an SSA-1099,- on Page 20 of IRS Publication 915.
The Social Security Administration mails benefit statements to beneficiaries every January for tax-filing purposes, according to the agency.
You can also access your benefit statement and print a replacement copy by logging in to your online Social Security account.
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