'I'm actually earning more each week than I ever have before'
"After contributing to Social Security throughout my entire working life, I'd hate to end up with an unexpected tax bill." (Photo subject is a model.)
Dear Quentin,
I read the response to the letter, "I claimed Social Security at 62: At 76, I'm working at Walmart. Why do I still owe payroll taxes?"
I have a similar problem. I'm 73. I work as a driver and receptionist for a nonprofit, and I'm actually earning more each week than I ever have before. However, I'm concerned that my Social Security benefits may be taxed at the end of the year.
After contributing to Social Security throughout my entire working life, I'd hate to end up with an unexpected tax bill. Should I have more federal income tax withheld from my paycheck to avoid owing money when I file my tax return?
Still Working in New Jersey
Related: 'The numbers don't lie': If I had invested my Social Security in the S&P 500 I'd have $4 million. Is the system broken?
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot reply to questions individually.
You can shift when you pay your taxes by adjusting your withholding, but you generally can't reduce your overall tax bill simply by withholding more or less.
Dear Working,
Congratulations on working into your 70s.
If you enjoy what you do, you're in your peak earning years. You are earning enough to pay taxes on your Social Security. You can choose to resist or accept, but you will likely end up paying taxes on your Social Security benefits. You can shift when you pay your taxes by adjusting your withholding, but you generally can't reduce your overall tax bill simply by withholding more or less. Uncle Sam will take his required slice of the pie, regardless. You can check out the IRS Tax Withholding Estimator, a free online tool that helps workers determine whether they are having the correct amount of federal income tax withheld.
The good news is that you're still healthy enough to work, earning a solid income while collecting Social Security. Because you've already reached your full retirement age, the Social Security earnings test no longer applies, so working won't reduce your monthly benefit. And while your Social Security benefits may be taxable on your federal return, New Jersey does not tax Social Security benefits. So, given that you are still working and earning a good income in your 70s, the more useful question is not: "How do I avoid paying taxes on my Social Security benefits?" but rather: "How do I avoid a surprise tax bill?"
Changing your withholding won't change how much you owe; it will only change when you pay those taxes. If you are withholding too much money, it makes sense to reduce that amount so you put that money in your back pocket in lieu of having it languish in IRS coffers. The Internal Revenue Service calculates any tax due on your Social Security based on your combined income or your adjusted gross income $(AGI)$ and 50% of your annual Social Security benefits. Depending on your combined income and filing status, up to 50% or as much as 85% of your Social Security benefits may be subject to federal income tax.
Related: After 46 years working, I'm not retiring - instead, I take a vacation every month. Is that a good life in your 70s?
Tax brackets for Social Security
For single filers, heads of household or qualifying surviving spouses, benefits generally are not taxable if combined income is under $25,000 a year. Between $25,000 and $34,000, up to 50% of your benefits will be taxed, and if you earn more than $34,000, up to 85% of your Social Security may be taxable. For married couples filing jointly, your benefits are not taxed if your AGI is under $32,000; they are taxed up to 50% if you earn between $32,000 and $44,000; and they are taxed by up to 85% if your AGI is over $44,000. Contact the IRS's benefits guidance and use Box 5 of your SSA-1099 when preparing your tax return.
Being taxed on your Social Security might seem unfair given that you are already paying 6.2% of your wages towards Social Security Insurance, in addition to the 6.2% that your employer contributes. That's because it goes towards the collective pool of money designed to prevent people who can no longer work and/or wish to retire from falling into poverty. Take heart in these words from AARP: "No matter how much income you receive from wages, self-employment, dividends, interest and other sources, you'll never be taxed on all your benefits." (The IRS's online tool can tell you how much of your benefits are taxable.)
Increasing your withholding can help you avoid a large tax bill and possible underpayment penalties, although it won't change the total amount of tax you owe. You can file your estimated tax payments quarterly to take the sting out. "You can choose to have 7%, 10%, 12% or 22% of your benefits applied to your next tax bill, and if during the year you find that you're withholding too much or too little, you can submit a new Form W-4V," AARP says. "Generally, if you owe more than $1,000 when you file your return - often because of income outside of Social Security that had no taxes withheld - the IRS may hit you with an underpayment penalty."
Otherwise, keep up the good work, and enjoy those checks.
Don't miss: 'I'll happily wait': Does delaying Social Security make sense for high earners like me?
By emailing your questions to The Moneyist or posting your dilemmas on The Moneyist Facebook group, you agree to have them published anonymously on MarketWatch.
More columns from Quentin Fottrell:
'I've plenty of time on my hands': Advisers bombard me with offers of free steak dinners. Is it wrong to go for the food?
A relative offered me a $25,000 loan, but wants a lien on my house. Are they taking advantage of me?
'I was shoveling sidewalks at 8 years old': I'm a 73-year-old boomer dad with two kids. Here's what I teach them about finance
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-Quentin Fottrell
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July 08, 2026 05:16 ET (09:16 GMT)
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