Your Tax Questions Answered
Taxable Benefits
Kiplinger editorial director Kevin McCormally and fellow tax experts Peter Blank and Mary Beth Franklin tackle your most pressing tax challenges.
April 13, 2009
QUESTION: I receive social security benefits now and know how to determine the taxable amount at the end of the year, but how can I calculate it on a quarterly basis as I make estimated payments? Can I annualize as I do for the rest of my AGI? --LH
KEVIN ANSWERS: Sure, that would be fine.
You can simply pay 25% of your expected tax on your benefits with each quarterly payment. Also, note that you can request withholding from your benefits if that would allow you to skip the quarterly payments all together. Here's the form: http://www.irs.gov/pub/irs-pdf/fw4v.pdf
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Reader Comments (2)
Posted by: Lucky at 01/11/2010 10:27:54 AM
Is there any tax relief for a lump sum lottery winning collected in 2009? Is there any averaging or other techniques one can use to lessen the tax bite of a lump sum distribution?
Posted by: rich at 07/15/2010 03:34:52 PM
I received an email today which referenced Title IX Revenue Provisions Subtitle A. Revenue offset(Sec. 9002) Requires employers to include in the W2 form of each employee the aggregate cost of applicable employer-sponsored group health coverage that is excludable from the employees income(excluding the value of contributiuons to flexible spending arrangements). The suggestion is that it will then be considered income and then be taxable. What is your opinion?