Trying to figure out how much in taxes to withhold from SS payments

Leann

Leann

Traveler
I'm not yet eligible for Social Security but I have been trying to read up on it so I'm informed when the time comes.

I understand that social security can be considered taxable income. My question is do pensions count as income? I receive two small pensions (any other income has been sporadic and will likely not be an issue when I start collecting social security). I'm trying to determine how much my social security payment will be reduced due to taxes if my pensions are counted as income.

Thank you.
 

Leann said:
I'm not yet eligible for Social Security but I have been trying to read up on it so I'm informed when the time comes.

I understand that social security can be considered taxable income. My question is do pensions count as income? I receive two small pensions (any other income has been sporadic and will likely not be an issue when I start collecting social security). I'm trying to determine how much my social security payment will be reduced due to taxes if my pensions are counted as income.

Thank you.
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Depends on what state you live in. Check out your state's rules and regs for
taxing both SS and pensions and overall income tax bases.
 
I still use a paid tax preparer and he gives me a projection of what to expect in the coming year.

If you prepare your own taxes I would check and see if the software can help you determine a sort of break-even point by plugging in the numbers and running different scenarios.

Good luck!
 
I prepared taxes for a number of years for the AARP tax help program. I will only address federal taxes, as some states do not tax pensions.
Your pensions count towards your total income.
As far as social security,
You'll be taxed on: up to 50 percent of your benefits if your income is $25,000 to $34,000 for an individual or $32,000 to $44,000 for a married couple filing jointly. up to 85 percent of your benefits if your income is more than $34,000 (individual) or $44,000 (couple)
Also figure in what your standard deduction is.
The amount of your standard deduction depends on the filing status you qualify for. In 2020 for example, single taxpayers and married taxpayers who file separate returns can claim a $12,400 standard deduction. Married couples filing jointly can claim an amount that's twice as large, $24,800, and taxpayers filing as "head of household" (single individuals with dependents) can claim a standard deduction of $18,650.
Hope this helps
 
Thank you, everyone, for your responses. This is going to be more complicated than I initially thought. I do have a CPA who files my annual income taxes so I'll reach out to him as the time to file for SS benefits draws near.
 
Leann

Pensions do count as income, at least in my state. I will have federal and state taxes taken from my check when I start receiving it next year after retiring. Also, I will not get much in SS because of the windfall elimination program. That is something you might want to check on. I decided to delay taking SS for a long time because of WEP.
 
I'm in N.J. My social security and $15,000 of my pension are exempt from state taxes. Only $41 of my pension is exempt from federal taxation and 18% of my social security was taxed.
 


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