by Sandra Block
Ann Reilley (Gugle) of Alpha Financial Advisors contributed to this article that appeared on Kiplinger.com. To read the article, please go to:
An excerpt from the article is below:
How to pay taxes on your benefits
Once you determine that you’ll owe taxes on a portion of your Social Security benefits, you’ll need to make another decision: how you’ll pay them.
The IRS provides a calculator you can use to estimate the amount of your benefits that will be taxable. You’ll need the amount of Social Security benefits from Box 5 on Form SSA-1099, which Social Security mails out to beneficiaries in January, along with the amount of income you receive from other sources, such as wages, pensions and IRA withdrawals, along with any interest you earn from municipal bonds. You can arrange to have taxes withheld from your benefits by filing Form W-4V with the Social Security Administration, by mailing it to the office closest to your home.
If you don’t have taxes withheld from your benefits, you may have to pay quarterly estimated taxes to avoid underpayment penalties. But retirees who wait until year-end to take distributions from their IRAs (and other tax-deferred accounts) have another option. Taxes withheld from IRA distributions are considered paid evenly throughout the year, even if they’re made in a lump-sum payment at year-end. You can ask your IRA provider to withhold enough to cover your estimated tax on the IRA distribution as well as taxes on your Social Security benefits, says Ann Reilley, a certified financial planner and certified public accountant in Charlotte, N.C. The advantage of this strategy is that you can continue to earn interest on your savings until the end of the year.
Click here to read the full article: https://www.kiplinger.com/retirement/how-to-cut-your-social-security-taxes