My husband died, I am 63 and self-employed using a sole-proprietorship. I am receiving $2000 a month from my husband's social security. I will have an income of over $16920. I am considering having taxes withheld before I receive the money. How will that effect the amount I need to repay for the overage in income? What is the best way to pay the 'overage' back? Should I make payment arrangements at the end of the year or have the expected amount withheld now? Taxes are a giant concern, Yikes! any advise for a self-employed REALTOR?

Hi,

I'm sorry for your loss.

If you have taxes withheld from your benefits, that means your monthly payment amount will be lowered by whatever percentage you have withheld. So, if you also need to have benefits withheld due to earnings in excess of the $16,920 exempt amount, it would take longer to get the necessary amount withheld.

For example, say you will earn $36,920 this year, or $20,000 over the earnings test exempt amount (https://www.ssa.gov/planners/retire/whileworking2.html). If your monthly benefit rate is $2,000, Social Security would need to withhold 5 months of your benefits to recover $10,000, or $1 for each $2 of your $20,000 in excess earnings. However, if your monthly rate was only $1,500 after tax withholding, it would take almost 7 months to recover the $10,000 required.

Personally, I would suggest giving Social Security as accurate an estimate of your net-earnings as possible so that they can withhold your benefits this year if necessary while you still have your earnings to get by on. They won't charge interest if you get overpaid, but why run the risk of having them stop your benefits to recover an overpayment at some later date when you may be more dependent on your Social Security income. And, the IRS could charge you a penalty if you underpay your taxes, so you want to be sure to either have enough taxes withheld or pay enough estimated taxes during the year.

Best, Jerry