Heard of Form W-4V? ProSeries Hasn't

[BobKamman]

It's the form that Social Security wants you to use to request or change federal tax withholding on Social Security benefits.

Yes, I know, not many people get Social Security and even fewer want tax withheld, but maybe a complete software package should offer it anyway?

I usually advise clients to find some other way to pay their taxes because it has been difficult to start or stop withholding on Social Security, but this seems to be the solution for one of my clients. 

The options offered are 7%, 10%, 12%, and 22%.  You can't specify dollar amounts or "withholding allowances."  The same form is used for withholding on unemployment, but the only choice is 10%.

[Greta]

I've printed a bunch of these vouchers and have used them often. Whenever clients owe taxes year-end, it's the *easiest* way to adjust their withholding for future years. I fill it out for them (using one of the four % available), have them sign it, and often mail it for them to the local social security office whose address I've pre-printed. Clients hate to owe money at the end, and this is painless for them and for me. The SSA office within a week or two sends them a letter in large print confirming that they have requested this withholding, and lets them know the date and amount of next direct-deposit. I highly recommend this method.

[PATAX]

Before they retire if it looks like they are going to owe in future, I recommend to them to inform Social Security to withhold federal income tax and it has always worked out okay... especially if they are going to collect benefits early while still working and you have to explain to them the two different ball games...

[Greta]

By the way, it's equally easy to stop withholding social security. Just mail them another voucher to stop. The SSA office is very efficient. It's easier to change withholding with SSA than with pensions and even W-2s.

[PATAX]

Good job Greta...

[Greta]

Good point. The one step further I go is hand them the voucher and fill it out together and give them a stamped envelope, often even the stamp.

[PATAX]

Same here.. I've also given out pens, glue sticks, large heavy-duty rubber bands, excetera... Some people are like me and really appreciate little things... others are never satisfied no matter what anyone does or gives them...

[BobKamman]

I wouldn't call them vouchers, but maybe that's local idiom, like they don't have ATM's in Pennsylvania.  Do you fill these out by hand?  Or are you using a different program from the one I have?  I find it odd that ProSeries has the W-4 and W-4P, but not the W-4V.  

In the early days of tax withholding on Social Security -- remember, it was tax-free before Reagan -- it was a hassle getting it started and then getting it stopped (like, when the client finally retired and dropped off the taxpayer rolls).  I'll believe you, if you say they're doing better now. 

[IRonMaN]

PA - yeah I give away used tires to my clients. They especially appreciate the ones that don’t have nail holes in.

Bob - I have never done it for them, but I have never had a client have any issues getting taxes withheld on Social Security.  And as a side note, some of the clients that have accomplished the mission aren’t exactly rocket scientists.

[Greta]

You're right, I don't know why I called them vouchers, similar to the PS vouchers I print for folks who mail in their taxes and estimated taxes. Yes I fill them out by hand (name, SSN, address is all), have the client sign & date, sometimes both spouses. I sometimes mail several clients' in one envelope to save on postage. Old school. It makes life easier for all in future years. I detest printing out estimated payment vouchers. Old folks who live on hefty investment income and don't use online payments also forget to send in estimated payments. So I use SSA often at 22% withholding to cover large investment income.

[Greta]

Does PS have a W-4? I didn't know that. I haven't caught on to what withholding is like now since "number of exemptions" went away.

[Just-Lisa-Now-]

where do you find the mailing address to use?

[BobKamman]

You look in the phone book?  Or online, for the local office.  SSA is the opposite of IRS.  They want to spread the work around as much as possible to local offices, because they want to have a physical presence in as many places as possible.  IRS will put all of its work on one task into an office in Texas, and then close down that one office when a hard freeze hits.  

[Greta]

I've had this local address in Roanoke, VA for decades. I just tried online "Social Security Office Near You" and got a bunch of ads, so maybe it takes a bit more time searching. The general tel is 800-772-1213, and they are very helpful with strategies as to best time to start SS. I hand the phone number to clients for this purpose. I remind them when they sign up to also ask for tax withholding if necessary.

[BobKamman]

They can also be very harmful on strategies about when to start SS.  I worked that out carefully for a friend/client, taking into account his other income and his wife's retirement planning.  He wanted the checks to start in July, and not sooner.  It was an ordeal to convince them not to backdate them to January.  He was smart enough to know that starting the payments earlier would lower the amount he received for life, while increasing his Medicare premiums by 50% in the current year.  Most people would just look at the lump-sum check as a windfall.  

Another client who is 68 and should have started collecting earlier, just told me he plans to apply in January so he'll get the 6% COLA.  I told him I'm not sure, but I think the COLA only goes to those who have started receiving checks by December.  Tried looking it up, and couldn't find an answer.  Does anyone know?  

[Greta]

You are right that it's daunting to select the best time to start SS, with so many moving parts. Mostly I don't have the date of death info. One SSA rep said to me, "I'm not supposed to say this, but why are you leaving money on the table by starting later?" Many of my rural clients are physical laborers who wear out their bodies by their early sixties, and their income stream stops. Other well-to-do clients have to consider the Medicare premium hit if their AGI gets too high. One client moves funds from IRA to Roth only up to the Medicare cliff (something like $78K per spouse?). So you are right, each situation needs to be customized, but 90% of the time it's self-evident among my clients. (Hw, I was surprised by two of my clients aged 70+ who were still working and put off starting their SS benefits out of ignorance.)

[Just-Lisa-Now-]

so it goes to the local office which is a block away from my office....theyre still not open to the public, so I wasnt sure if it went to a central processing address or not.

[PATAX]

Also have a client that did not sign up when he was supposed to... He thought it was some type of welfare program, he was an immigrant from Europe... I told his wife of course that it wasn't a welfare program and that he should sign up because he paid into the system and he is entitled to it... He did and he received the back checks, I can't remember if COLA was included, but I would imagine it would be because the payments were probably automatically generated from the computer system, but I'm not sure...

[Greta]

I agree that there is a lot of misinformation. The two clients who didn't sign up even past age 70 thought that as long as they were working and earning over 17K they couldn't collect social security benefits. I ask each client about this annually; and also about refinancing their mortgages, as an annual financial checkup.

[PATAX]

You hit the nail on the head Greta... Had one client tell me that he was not going to sign up for Social Security because it wasn't worth it due to the 85% tax he would have to pay... Of course I told him that was not correct and explained the rules to him... Maybe they get their information from Joe's Barber Shop, as someone else likes to say, or maybe from Salamander Sally's Beauty Salon...😉😀