Social Security tax withholding percentage to avoid year-end tax bill - new retiree question

The standard options for SS withholding are 7%, 10%, 12%, or 22% of your monthly payment. Most middle-income retirees find 10-12% works well, but it really depends on your total household income and tax bracket. Since you have pension plus your work income, you might want to go with 12% to be safe. You can always adjust it later by submitting a new W-4V form to SSA.

we didnt withhold anything the first year and got HAMMERED with taxes!! almost $4000 we hadnt planned for. now we do 15% withholding and usually get a small refund. better safe than sorry!!!

I'm a retired accountant, and I always recommend that my clients do a rough tax projection when they first start receiving Social Security. Add up all your expected income sources for the year (your job, pensions, her SS, any investments), subtract your standard deduction, then calculate your approximate tax bracket. That will tell you the appropriate withholding percentage. Remember that with your combined income, up to 85% of her Social Security benefits might be taxable depending on your total AGI.

You should know that the SSA withholding system is extremely annoying!!! I've had them somehow lose my withholding request TWICE in the past 3 years. Make sure you keep a copy of whatever form you submit and check your benefit statements to confirm the withholding actually starts. And don't assume it will continue automatically year after year.

have you tried calling the ss office to ask them? good luck getting thru lol

One other important thing to consider: If this is your wife's first year receiving benefits, remember that she's only getting benefits for part of the tax year. When calculating the right withholding percentage, you should account for this partial year of benefits when projecting your tax situation. Next year, when she receives benefits for all 12 months, you might need to adjust the withholding percentage accordingly.

My husband and I just have 15% taken out and we sleep better at night. We're in a similar situation - I have a pension and he works part time. We used to do 10% but still owed a bit at tax time.

dont forget some states tax SS too!! we moved from nebraska to arizona partly because AZ doesnt tax our social security!

After getting burned by underwithholding our first year on Social Security, our tax preparer gave us some great advice. She said to look at last year's total tax bill, subtract any withholding from other sources like pensions, and then have enough withheld from Social Security to cover the rest. Has worked perfectly for us the last three years.

I REALLY wish the SSA would update their systems to allow us to change withholding percentages online instead of having to mail in paper forms every time. It's ridiculous that in 2025 we're still dealing with such outdated processes for something as simple as tax withholding. My Medicare withholding I can adjust online, but not SS??

As someone who went through this exact situation two years ago, I'd recommend starting with 12% and then monitoring your quarterly estimated tax payments. What really helped us was using the IRS withholding calculator online - it takes into account all your income sources and gives you a pretty accurate estimate. Just plug in your wife's annual SS benefits ($2,480 x 12 = $29,760), your part-time income, pension amounts, and any other income. The calculator will tell you exactly how much total tax you should have withheld for the year. Then you can figure out what percentage of her SS benefits needs to be withheld to hit that target. We found 12% worked perfectly for our situation, but everyone's different depending on their total income and deductions.

I'm in a very similar boat - just started receiving my benefits at 67 and was completely overwhelmed by the withholding options. What I ended up doing was meeting with a tax professional for one session to help me calculate the right percentage based on all our income sources. It cost me $200 but was totally worth the peace of mind. She helped me understand that with my pension and my husband's continued work income, we needed to withhold 15% to avoid owing at tax time. The key thing she told me was to remember that Social Security withholding is "flat" - it doesn't adjust based on your other income like payroll withholding does. So you really need to look at your complete tax picture to get it right. Don't be afraid to start a bit higher than you think you need - getting a small refund is much better than owing thousands in April!

I went through this same situation last year when I started my benefits at 65. Here's what I learned the hard way: definitely start with at least 12% withholding, especially with your combined income sources. What really caught me off guard was how much of our Social Security became taxable once you factor in pension income plus your part-time work. The IRS uses this thing called "provisional income" to determine how much of your SS is taxable, and it includes half your SS benefits plus all other income. With your wife's $29,760 annual benefit plus your $32k work income plus pension, you're likely looking at having 85% of her SS benefits being taxable. I started with 10% withholding and ended up owing about $2,800 at tax time. Bumped it up to 14% the following year and now we usually get a small refund. Also, don't forget you can make quarterly estimated payments if you find the withholding isn't quite enough. Better to be safe than scrambling in April!