Can You Change Social Security Tax Withholding Online? A Comprehensive Guide

Did you know that 85% of your Social Security benefits might be taxable on your individual income tax return? This is the harsh reality for retirees who have more than $25,000 in combined income as a single filer or $32,000 as a joint filer.

Without properly planning how your Social Security benefits impact your tax liability, you could be left with an unexpected tax bill when filing your return. Instead of paying a large tax bill year after year, the Social Security Administration can withhold Federal taxes from your benefits before they even hit your bank account.

Whether you are in the process of signing up for Social Security benefits or have been enjoying the income for years, readjusting your tax withholding is a great way to ensure you don’t owe Uncle Sam any additional money.

In this guide, we’ll cover everything you need to know about changing your Social Security tax withholding online, including the necessary documentation and considerations to keep in mind.

How Much of Social Security is Taxable

Social Security tax withholding is Federal income tax deducted from your benefits. This process is similar to a W-2 employee having Federal taxes deducted from their pay. However, Social Security benefits do not have FICA taxes taken out, just Federal withholding.

The Social Security Administration allows you to select different percentages of withholding, including 7%, 10%, 12%, and 22%. Your financial situation will determine which tier is best for you. For example, if you usually owe 20% of your income in taxes each year, it can be beneficial to select the 22% tier.

Social Security tax withholding doesn’t impact your gross benefits, but it does change the net benefits deposited in your account each month. Let’s say you earn $1,000 per month. You decide to have 10% withheld. Instead of receiving the full $1,000 each month, you would only receive $900.

How to Change Social Security Tax Withholding Online

The process for changing your Social Security Federal tax withholding is relatively straightforward. Here’s what you need to do if you want to add withholding for the first time:

1. Sign into your Social Security account
2. Select “Tax Withholding” from the Retirement dropdown menu
3. Select “Change Your Federal Withholding”
4. Review the change and select “Continue”

This process can be done in less than ten minutes; however, the IRS requires a paper form to be filled out in certain circumstances. If you are changing or stopping your withholding, you will need to go through the following steps:

1. Download Form W-4V from the IRS website
2. Fill out the form and check the percent withholding you want
3. Drop the completed form off at a Social Security office, mail the form, or fax the completed form to the Social Security Administration

If you find that you don’t have access to change your Federal withholding through your online account, you may need to fill out Form W-4V.

What Documents Are Needed to Change Social Security Tax Withholding Online

The Social Security Administration doesn’t require dozens of documents to be submitted to substantiate your withholding claim. In fact, the process is straightforward, usually only requiring you to verify your identity upon sign-in. When it comes to changing your withholding, the percentage you select will be heavily dependent on your personal financial situation.

How much do you generally owe in taxes each year? How will Social Security benefits impact your tax situation? This is why it’s generally best to work with a qualified accountant to determine how much to withhold. Here are the documents and information you should compile before tackling a withholding change:

• Full legal name
• Social Security Number
• Address
• Claim or identification number (if any)
• Understanding of what percentage to withhold

If you are unsure what percentage you need to withhold or are confused about the online process, reach out to an accountant or financial planner who can help you navigate the necessary steps.

Additional Considerations Before Changing Your Withholding

Before changing your withholding, it’s important to understand how your financial situation will change over the next few years. If 85% of your Social Security benefits are taxable this year, but you expect none to be taxable next year, it might not make sense to go through the process of changing your withholding. Instead, you can make estimated tax payments.

Although the Social Security Administration doesn’t limit how often you can change your withholding, it can be a hassle to constantly change your percentage and open the door to more errors. Try to limit your changes to once a year.

Remember, if you withhold too much Federal withholding from your Social Security benefits, you will generally receive a refund when you file your individual income tax return. It might be better to take a conservative approach to withholding, with excess withheld coming back to you during tax time.

Additionally, the Social Security Administration has a variety of resources to help you make this change, including phone representatives. During normal business hours, you can call +1 800-772-1213. If you are deaf or hard of hearing, there is a special phone line that you can reach by calling +1 800-325-0778. Otherwise, you can stop into a local Social Security office and receive in-person assistance.

Conclusion

The decision to change or add Social Security withholding depends on your expected tax liability. Regularly reviewing your withholding settings is important to ensure they meet your current needs. If you have questions about how much to withhold, it’s best to contact a qualified accountant or financial planner.

FAQs

Does Social Security withhold state taxes?

No, the Social Security Administration only withholds Federal taxes. This is because many states treat Social Security benefits as nontaxable.

How long does the process time take for Form W-4V?

The fastest way to process Form W-4V is to drop it off at a local Social Security office. Mailing or faxing the form can take longer. The change can be made the same day when dropping it off at a Social Security office.

Can I withhold a fixed dollar amount from Social Security Benefits?

No, the Social Security Administration only withholds Federal taxes based on select percentages.