If I Work While Receiving Benefits, Do I Still Pay FICA Taxes?

Yes, for as long as you stay on the job

by: Stan Hinden, from: AARP Bulletin, May 17, 2012

Q. I recently began taking my Social Security benefits at age 66 — my full retirement age. If I continue to work, do I still have to pay Social Security and Medicare taxes?

A. You do. In this situation, your age doesn’t matter. As long as you work at a job that’s covered by Social Security — as most are — your employer has to deduct both Social Security and Medicare taxes from your pay check. In addition, the employer must pay its share of matching taxes.

See also: Can your Social Security payments be garnished?

If you’re self-employed and the annual net profit from your business is more than $400, you must report those earnings and pay both the employee and employer shares of the required Social Security and Medicare taxes when you file your personal income tax return.

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Your Turn: What is the best age to apply for Social Security benefits?

Q. Now that I’m retired, do I have to pay taxes on my Social Security benefits?

A. It depends on your total income. If you file your income tax return as an individual, you will have to pay taxes on some of your benefits if your adjusted gross income, untaxed interest and half your Social Security benefit add up to more than $25,000. If you file a joint tax return with your spouse, you’ll have to pay benefits taxes if those sums add up to more than $32,000.

When it comes to state taxes, some states tax Social Security benefits, while others do not. For more information, check with your state taxing agency. See: “Paying income tax on Social Security benefits.”

The Social Security Administration does not withhold federal taxes from your benefit payments unless you request it. To make that request, complete IRS Form W-4V (PDF), which is available on the IRS website or by calling Social Security at 1-800-772-1213. When you fill out the form, you’ll be asked to choose among four withholding levels: 7, 10, 15 or 25 percent. See “Withholding federal taxes from my Social Security check.”

Stan Hinden, a former columnist for the Washington Post, wrote How to Retire Happy: The 12 Most Important Decisions You Must Make Before You Retire. Have a question for the Social Security Mailbox? Check out the archive. If you don't find your answer there, send a query.