Tax Debt and Your Social Security: What You Need to Know

Money Explainers

Don't let tax debt reduce your Social Security benefits. Learn how the IRS can withhold up to 15% of your payment and what you can do to prevent it. Unpaid taxes can directly impact your Social Security. The IRS has the power to garnish your benefits. Find out how much and why.Protect your retirement income. Understand the IRS's authority to withhold Social Security for back taxes. Proactive tax management is key. #RetirementPlanning #TaxDebt#SocialSecurity

Transcript

00:00Another Withholding for Retirees

00:02How much can the IRS withhold from your Social Security payment if you owe them taxes?

00:08There s another significant reason your monthly check could be smaller,

00:11owing back taxes to the federal government.

00:14While many retirees might associate reductions in their Social Security benefits

00:18with factors like taking payments before their full retirement,

00:22age or earning too much while working, here's what you need to know.

00:26Even if you default on a loan, while they might be able to claim a portion of your personal assets,

00:31like funds in a savings account, your Social Security benefits themselves typically remain safe from them.

00:38If you owe any back taxes to the IRS, the government has the authority to intervene,

00:42especially those who might have recently stopped working

00:45and are now receiving benefits to ensure they pay any back taxes owed to the government.

00:51Staying vigilant about your tax obligations can prevent this type of reduction

00:55in your Social Security benefits later on.

00:58The specific amount they can withhold is up to 15% of your monthly Social Security payment.

01:04Private creditors vs. the federal government

01:06It s important to understand that private creditors,

01:10such as credit card companies or mortgage lenders,

01:14generally cannot access any part of your federal benefits,

01:17including your Social Security payments.

01:19The IRS is different.

01:22However, this protection does not apply when the creditor is the federal government itself.

01:28The amount of withholding the IRS can garnish your Social Security checks to pay off the debt,

01:33preventing the reduction.

01:35While this is untypically an issue for most people

01:38who have left the workforce and are enjoying retirement,

01:42it's crucial for anyone.

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