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Should you withhold taxes from your Social Security benefit? For many retirees, Social Security is a cornerstone of retirement income, but benefits can still be subject to federal income tax—and in some cases, state income tax. That raises an important question many ask: should you withhold taxes from your Social Security benefit, or pay them another way?

In this video, we break down everything you need to know about withholding taxes from Social Security benefits, including:
How Social Security benefits are taxed at the federal and state level
The pros and cons of choosing to have taxes withheld from your monthly benefit
How to set up withholdings and have taxes taken out of Social Security checks
What to do if you decide not to withhold and instead make quarterly estimated tax payments
IRS penalties you can avoid with proper planning

By the end, you’ll know whether it makes sense to withhold taxes from your Social Security benefit in your situation—and how to set it up if you decide it does.

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00:00 Turning On Your Social Security Benefit
01:02 Social Security Withholding Options
01:30 Social Security is Taxable at the Federal Level
03:07 State Taxes on Social Security
03:40 Estimated Tax Payments on Social Security
04:04 Electing to Withhold Taxes From Social Security Benefit
04:35 Withholding Solution for Social Security


Frequently Asked Questions (FAQs)

Are Social Security benefits taxable?
Depending on your total income, up to 85% of your Social Security benefits may be subject to federal income tax. The amount taxed is based on your provisional income—which includes your adjusted gross income, tax-exempt interest, and half of your Social Security benefits.

How can I have taxes withheld from my Social Security benefits?
You can elect voluntary withholding through the Social Security Administration. Fixed percentages of 7%, 10%, 12%, or 22% can be withheld from each monthly payment and sent directly to the IRS to cover your federal tax liability.

How do I request tax withholding from my Social Security payments?
You can make the election online through your my Social Security account or by filing IRS Form W-4V (Voluntary Withholding Request) with your local Social Security office. Once processed, the withholding percentage applies automatically to future payments.

Which states tax Social Security benefits?
Most states do not tax Social Security, but a handful—including Colorado, Kansas, Minnesota, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, West Virginia, Wisconsin, and Connecticut—do in some form. Rules and exemptions vary by state.

What happens if I don’t withhold taxes from my Social Security income?
If you choose not to withhold, you may need to make quarterly estimated tax payments to the IRS. Missing these payments or paying too little can result in underpayment penalties and interest charges.

When are quarterly estimated tax payments due?
Estimated payments are typically due on April 15, June 15, September 15, and January 15 of the following year. These payments cover taxes owed on income not subject to withholding, including Social Security, pensions, and investment income.

How can retirees avoid IRS underpayment penalties?
Setting up withholding directly from Social Security benefits is often the easiest option. Alternatively, retirees can work with a tax professional to estimate their annual tax liability and adjust quarterly payments accordingly to avoid penalties.