Setting Aside Tax on Side Income: Social Security Withholding or Estimated Payments

When you earn money on the side, nobody takes tax out for you. A regular paycheck has tax withheld every time. Side income doesn’t. That means it’s up to you to set some aside and get it to the IRS.

The good news is that you have choices, and one of them is surprisingly easy if you already get Social Security. This guide walks through the options in plain terms, so tax time doesn’t bring a nasty surprise.

This is general information, not tax advice. Everyone’s situation is different, and state taxes have their own rules. A tax preparer or the IRS can help with yours.

Why This Matters

The IRS describes federal income tax as “pay-as-you-go.” You’re expected to pay during the year, not all at once in April. If you don’t pay enough along the way, you may owe a penalty on top of the tax.

Side income can also bring self-employment tax, which covers Social Security and Medicare for people who work for themselves. Our guide to taxes on side income explains that part.

Do You Need to Pay During the Year?

According to the IRS instructions for 2026 Form 1040-ES, you generally need to make estimated payments if both of these are true:

You expect to owe at least $1,000 when you file, after subtracting withholding and refundable credits.
Your withholding and credits will be less than the smaller of 90% of your 2026 tax, or 100% of the tax on your 2025 return.

If your adjusted gross income for 2025 was over $150,000 ($75,000 if married filing separately), the second test uses 110% instead of 100%.

There is also an exception. If you were a U.S. citizen or resident for all of 2025 and owed no tax at all for that year, you generally don’t need to make estimated payments for 2026.

For a very small side income meant to cover one modest bill, you may not reach these amounts at all. But side income adds to everything else you have, such as a pension or part-time wages, so it’s worth checking.

Option 1: Have Tax Withheld From Social Security

If you get Social Security, you can ask for federal income tax to be withheld from your monthly payment. Many people find this the simplest way to cover a little extra tax, because it happens automatically.

How Much Can Be Withheld

Social Security lets you choose 7%, 10%, 12% or 22% of your monthly benefit. It doesn’t accept a flat dollar amount.

How to Set It Up

Online: Sign in to your my Social Security account at ssa.gov and choose “Change tax withholding.” You can start, stop or change withholding there.
By phone: Call Social Security at 1-800-772-1213 (TTY 1-800-325-0778), Monday through Friday, 8 a.m. to 7 p.m. in most time zones, and tell them the percentage you want.
By form: Fill out IRS Form W-4V, Voluntary Withholding Request, sign it, and mail it or take it to your local Social Security office.

Social Security’s own page has the details: Request to withhold taxes. If you haven’t set up your online account yet, our sister site SeniorsTips has a step-by-step guide to my Social Security.

Option 2: Withholding From a Pension or a Job

If you get a pension, you can usually ask the payer to withhold more using Form W-4P. If you still work a regular job, the IRS says you can file a new Form W-4 with your employer and enter an extra amount to withhold from each paycheck. The IRS’s Tax Withholding Estimator can help you check whether the amount looks right.

Extra withholding from a pension or paycheck can cover the tax on your side income too, so you may be able to skip estimated payments altogether.

Option 3: Pay Estimated Tax Yourself

If withholding doesn’t suit you, you can send payments to the IRS yourself. These are called estimated tax payments.

The 2026 Due Dates

For income earned in 2026, the four payments are due:

April 15, 2026
June 15, 2026
September 15, 2026
January 15, 2027

The IRS says you can skip the January payment if you file your 2026 return by February 1, 2027 and pay everything you owe with it. If a due date falls on a weekend or holiday, paying the next business day counts as on time.

Started your side income partway through the year? You don’t have to wait for a due date. The IRS says you can pay in smaller amounts, weekly or monthly, as long as enough is paid by the end of each period. Because any penalty depends partly on how long a payment was late, paying sooner rather than later helps.

Ways to Pay

Your IRS Online Account at irs.gov/account, where you can also see past payments.
IRS Direct Pay, which is free and comes straight from your bank account.
EFTPS, also free, though you need to enroll first.
By mail, with a check or money order payable to “United States Treasury” and the voucher from Form 1040-ES.
By debit or credit card, though card processors charge a fee.

Only pay through irs.gov or the official links it gives. The IRS says it never asks for or accepts gift cards as payment. A call or message that rushes you or threatens you is a warning sign of a scam. SeniorsTips covers these in Government Impostor Scams.

Side Income Can Make More of Your Social Security Taxable

This surprises many people. Whether your Social Security is taxed depends on your “combined income.” The IRS explains it as half of your Social Security benefits plus your other income, such as pensions, wages and interest. Side income counts as other income.

Single filers: if combined income is between $25,000 and $34,000, up to 50% of benefits may be taxable. Above $34,000, up to 85% may be taxable.
Married filing jointly: the ranges are $32,000 to $44,000 for up to 50%, and above $44,000 for up to 85%.

So a little extra income can sometimes raise your tax by more than you’d expect. If you’re near one of these lines, it’s a good reason to plan ahead.

A Deduction That May Help

The IRS says that for 2025 through 2028, people aged 65 and older may claim an extra $6,000 deduction, or $12,000 for a married couple if both qualify. It starts to phase out above $75,000 of modified adjusted gross income for single filers and $150,000 for joint filers. This may lower the tax you owe, so ask your tax preparer whether it applies to you.

If You Fall Behind

If you didn’t pay enough during the year, the IRS may charge a penalty based on how much was underpaid and for how long. The IRS says the penalty may be reduced if you or your spouse retired in the past two years after reaching age 62, or became disabled, and you had reasonable cause. It’s still best to plan ahead rather than count on that.

A Simple Plan That Works for Many People

Each time you’re paid for side work, move a share into a separate savings account or a “tax” envelope.
Keep simple records of what you earn and what you spend on the work.
Once a year, or when your income changes, check your numbers with the IRS Tax Withholding Estimator or a tax preparer.
Choose one way to pay: Social Security withholding, pension or paycheck withholding, or estimated payments.
Remember to count taxes when you work out how much side income your bill needs.

Benefits Can Be Affected Too

Taxes aren’t the only thing to check. If you’re under full retirement age, Social Security has a yearly earnings limit. SSI, Medicaid and housing help have their own rules about income. Look at Social Security’s page on working while getting benefits and talk to the office that handles your benefits about your own situation.

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