When you reach the appropriate age, it’s easy to apply for Social Security retirement benefits – just go to Social Security’s website, fill out the online form and you’re essentially done.
But many people overlook the next step – completing Form W-4V, which asks you how much federal income tax you want withheld from your benefits. And if you skip this step, you could face an unpleasant surprise when it’s tax-filing time, because Social Security benefits can, indeed, add to your taxable income.
• If you’re a single filer: If your “combined” income is between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your Social Security benefits. (“Combined” income includes your adjusted gross income, non-taxable interest, and one-half of your annual Social Security benefits.) If your combined income is more than $34,000, up to 85 percent of your benefits may be taxable.
