Why Isn't The Amount That Social Security Withholds For Taxes Based On My Full Benefit Rate?

Sep 21 2018 - 8:20pm

I just started receiving social security benefits and completed the W-4V form to withhold 10% for federal taxes. I just received the benefits statement, and I noticed that the 10% calculation was derived from the total benefit LESS the $134 Medicare deduction. Example, keeping the math simple - lets say my initial benefit amount was $1,134. After deducting $134 for Medicare, the benefit is reduced to $1,000 and they are now withholding 10% of the $1,000, not the $1,134.
As I understand it, the total $1,134 is the amount I have to report as Social Security income. Why isn't the 10% based on that number, or am I just misunderstanding something.
Thanks.

Hi,

I'm sorry, but I can't really answer your question. My expertise is limited to Social Security benefit regulations, and I only have a rudimentary understanding of the rules dealing with the taxation of benefits.

If you're concerned that withholding 10% of your net benefit rate will not be sufficient to cover any federal taxes you may owe on your Social Security benefits, you may want to consider upping your percentage withholding to 12% or 22% (https://www.ssa.gov/planners/taxwithold.html). Prior to doing that, however, you might want to review the following IRS publication to determine how much federal tax you would likely end up owing on your benefits: https://www.ssa.gov/planners/taxwithold.html.

Best, Jerry