Your Social Security benefits may be taxable. To find out, add your adjusted gross income to one-half your Social Security benefits and any nontaxable interest you earned. If, for example, the total is more than $25,000 for a single person or $32,000 for a couple filing a joint return, the benefits are partly taxable. Income tax withholding is one of several deductions that may affect your Social Security checks.
Withholding Income Tax
If you owe income tax on your benefits, you can make quarterly estimated payments each year. The alternative is to ask the Social Security Administration to take withholding out of your benefits. Download a W-4V form from the Internal Revenue Service website and send it in. You can have 7, 10, 15 or 25 percent withheld -- no other amounts. Alternatively, if you still work, you can ask your employer to take more withholding from your salary.
If you're old enough to collect Social Security, you may qualify for Medicare too. Premiums for Medicare Part B -- the coverage for doctor services, outpatient treatment and various other services -- come out of your Social Security benefits. If you're not receiving benefits, there are other ways to pay. The size of your premium depends partly on your modified adjusted gross income, or MAGI. The higher your MAGI, the larger the premium. The premium is also affected by your filing status -- single, married filing jointly, married filing separately and so on.
Effects of Earnings
Once you turn 62, you can start receiving Social Security benefits, even though for most Americans that's under full retirement age. If you continue working, however, the Social Security Administration will deduct $1 from your benefits for every $2 that you earn. In the year you hit full retirement age, the deduction is only $1 for every $3. The loss is only temporary, though. After you reach full retirement, the deducted dollars will be added back to your benefits.
Garnishment and Levy
Creditors can try to garnish your paycheck, but federal law says they can't garnish Social Security. There are exceptions, though. If you're not paying alimony or child support, for instance, the Social Security Administration will deduct the money from your payments if it receives a valid court order. The agency will also deduct money to pay for overdue federal taxes. While you can appeal to the agency over some benefit-related decisions, you can't appeal a garnishment or tax levy.
- Social Security Administration: Income Taxes and Your Social Security Benefits
- Social Security Administration: Withholding Income Tax From Your Social Security Benefits
- Medicare: Ways to Pay Part A and Part B Premiums
- Social Security Administration: Medicare Premiums
- Social Security Administration: How Work Affects Your Benefits
A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.