Saturday, March 23, 2013
Voluntary withholding from Social Security benefits: a "poison pill" against debt ceiling debacle?
I’ve crafted my own “poison pill” answer to any future debt ceiling crisis (which could come up again in late May).
Since taxes this year are substantially more than what I had anticipated, I’m going ahead with some voluntary tax withholding withdrawals for 2013. For Social Security, this is done with a form W-4V. There is an explanation here.
Only federal tax can be withdrawn from Social Security; state income taxes cannot.
But if a debt ceiling crisis did cause delay or even suspension of Social Security payments, now the IRS would actually lose even more daily revenue, from me at least.
Call it an “insurance policy”.
Of course, the real risk of disruption may be less than we feared because of the legal status of the Social Security Trust Fund as a bond holder.