Avoid Hefty Social Security Payment at Tax Time by Paying Ahead – Here’s How

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If you plan on retiring soon, now is the time to think about 2022 federal income taxes, as taxation of retirement income is different from the taxation of income derived from working. These changes are primarily due to how taxes are withheld on retirement income, according to Fedweek.

See: What Age Do I Need To Start Worrying About Social Security?
Find: Social Security Schedule: When the First COLA Checks Will Arrive in January 2022

To avoid ending up paying a lot of federal income taxes at filing time, with some planning, it’s more beneficial to pay your taxes over the course of the tax year.

Fedweek says that regarding federal annuity (CSRS or FERS), you likely filled out a W-4P with your retirement papers and now taxes are being withheld from your monthly payments.

“You probably based this withholding on the last W-4 you filed while still an employee and it will most likely cover all taxes due from your CSRS or FERS annuity. There’s little problem here. Where it gets problematic is when we get to your Social Security and TSP withholding,” according to Fedweek.

The key to avoiding a tax surprise, particularly in your first year of retirement, is to pay the income tax on your Social Security as you go, Fedweek recommends.

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See: Social Security Benefits Might Get Cut Early — What Does It Mean for You?
Find: You Should Check Your Social Security Balance Regularly — Here’s Why

Here’s what you can do, per Fedweek:

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