Posted on February 05, 2006 on Timesnews.net, by John Vogt, Columnist
February is usually the month people here in Kingsport start to think about completing all those exciting IRS tax forms. You have finally received all your W2, Bank interest 1099s and what you received from the government. If you are among the more than 15 million people receiving Social Security benefits who must pay taxes on their benefits, here is a suggestion: Have your federal taxes automatically withheld from your monthly payments.
The law states that individuals must pay federal taxes on their Social Security benefits if they have total income of more than $25,000, and married couples must pay federal taxes on total income of more than $32,000. People whose only source of income is Social Security generally don’t pay taxes. However, if you have other income, such as a pension, wages, interest, dividends or other taxable income, this added to your benefits could render a portion of your benefits taxable.
For individual tax filers, if your income is between $25,000 and $34,000, you may have to pay tax on up to 50 percent of your benefits; if your income is more than $34,000, up to 85 percent of your benefits may be taxable.
For couples filing jointly, if your combined income is between $32,000 and $44,000, you may have to pay tax on up to 50 percent of your benefits; if your combined income is more than $44,000, up to 85 percent of your benefits may be taxable.
Although you are not required to have federal taxes withheld from your monthly benefits, you may find it easier than paying quarterly estimated tax payments. If you are interested in taking the easy automatic withholding route to paying taxes, here is what you need to know.
Simply complete IRS form W-4V, Voluntary Withholding Request, which is also available on Social Security’s Web site at www.socialsecurity.gov. Select the percentage of your monthly benefit amount you want withheld: 7, 10, 15 or 25 percent. Then sign and return the form to Social Security. Our address is 2401 South Wilcox Drive , Kingsport TN 37660 . Of course, if your estimate is off, it will be adjusted when you file your federal income tax return.
For more information, visit our Web page, “How to Have Federal Taxes Withheld from Your Social Security Benefit” at www.socialsecurity.gov/taxwithhold.html. Or call us at 1-800-772-1213 and ask for the booklet, “Social Security – What You Need to Know When You Get Retirement or Survivors Benefits.”
Now for a few more answers to questions which rose during talks in our community over the last month:
Question: I turned 65 last year but didn’t bother applying for benefits because my neighbor said the new retirement age was 67. Now a co-worker tells me the retirement age is 66. Who is right?
Answer: Social Security’s full retirement age is rising from 65 to 67, but the change is gradual. For people born in 1941, it is 65 and 8 months. You can determine exactly what your full retirement age is by visiting the Social Security Web site at www.socialsecurity.gov. Just click on the “Plan Your Retirement” link.
Question: I am 58 years old and my husband died just before Thanksgiving at age 65. He was still working at the time of his death, and I will be getting a small pension from his employer. I only work part-time now and it may be difficult for me to find a full-time job. What is the earliest age that I would be eligible for widow’s benefits?
Answer: As a widow, you can receive benefits from Social Security as early as age 60, as early as age 50 if you are severely disabled, or at any age if you are taking care of a child who is under age 16 or disabled and receiving Social Security benefits.
Always consult with an experienced social security disability professional when you need help getting your disability benefits.