John, very good to see you. It is that time of year tax season. Are you underpaying your taxes throughout the year? We're going to talk through the problems it may create, including some big ones regarding social security. So John, what is happening? What are the top unknown charges that come from underpaying your taxes?

Yes, so this is probably everybody's least favorite time of year, right? People having to make having to do taxes, yeah, for their Turbo Tax or get everything together for their tax person, I hate it. And then the poor CPAs enrolled, enrolled agents and tax preparers of this role, they're just miserable. So what this video is for is those people that are owing on their taxes, specifically those people that are owing more than $1,000 you have to be aware of what you may be creating, and that is an underpayment penalty. So I'm going to put this up on the screen here. Underpayment penalties are applied for when people owe more than $1,000 in their taxes, and that's after withholdings, deductions and credits, or you've paid 90% of this year's tax, or less than 100% of last year's tax that is 110 if your adjusted gross income was over $150,000 so if you're in those criteria, guess what? Folks, you're actually going to be paying short term interest plus an extra three percentage points on your tax bill as an underpayment penalty. Wow, so this could have been avoided, right? That's short term interest, and that, that 3% percentage penalty, that's a tip to the IRS, right? We don't like tip of the IRS, do we? Erin, No, we only pay Uncle Sam what he needs. Yes, yes, not a dime more, right? You can be patriotic, but you can be smart, and this money adds up. So what you need to understand is our tax system is pay as you go. So whether you're withholding from your paycheck or wherever you're getting your your retirement funds from, or you're paying quarterly payments. If you're not keeping up, it's not just, oh, we owe this money at the end of the year, the government is going to charge you penalties and interest. So don't make that mistake. Make sure you're keeping up with your tax bill throughout the year to avoid these costly underpayment penalties.

So how does this affect social security? Then, how Social Security is taxed?

Yes, so let's talk about Social Security and its taxation. First, Social Security, originally is a tax free benefit. However, you have a thing called provisional income. So it's just another tax category. You have to understand ordinary income, you know, modified adjusted gross irmama, now you have provisional income. Provisional income, this is what goes into Social Security. Half of your Social Security benefit, plus all earned income, so as distributions from any IRA account, your pensions, rental income, capital gains and dividends and those not so free. Tax Free municipal bonds, they're not 100% tax free, because they go into the taxation of your Social Security. And what you have to understand is, once you get under certain AGIS, or, I'm sorry, certain provisional income limits as a single filer or a married filer, your social security now, as you can see, becomes 50% taxable, and then for a lot of people, 85% taxable. These numbers have not been adjusted since 1993 so right these, these low numbers have remained for over 30 plus years, and you have to understand that when we say taxable, it's 50% of your benefit is subject to taxes. So where would you find this? Go to form 1040, on your IR on your on your tax filing, your IRS Form. Line six A, that is your Social Security benefit. Line 6b is the Social Security benefit that is subject to taxation. So right, right off the bat, you're going to be able to tell that you're paying 50% of your benefit is being subject to taxes, or 85% is being subject to taxes. So you have to understand how Social Security is taxed. For a lot of people, it is what it is. You need more than $44,000 a year as a married couple, especially here in Southern California, to live off of and you're being subject to taxes. But it's also another good reason to understand how perhaps having that tax free income later in life could maybe reduce your benefit from 85% being taxed to 50% being taxed. But either way, that's money that's staying in your pocket. So what are the solutions? Then, how do we avoid these unnecessary taxes and fees?

Yeah, well, as I said, it's a pay as you go system. So keep up with the Joneses. That's the only time you're going to say this, Erin, keep up with the tax. The tax Joneses throughout the year. So you have two ways, quarterly taxes or withholdings. So quarterly taxes, if you look at the screen here, April 15, right, that was just a few days ago, is when one of your quarterly taxes is due. June 16, September, 15, and then January 15 of 2026, those are going to be when you're going to make quarterly tax payments. Now the other way is just to simply withhold. So if you're taking out Ira distributions, or you have annuities or you have a work pension, make sure you're withholding, and this way you don't have to do quarterly tax payments, and you're making these tax payments throughout the year. And another way that a lot of people don't understand and realize that they can actually do this is by filing IRS Form, W, 4v, this allows you to withhold from your Social Security. And you basically have four options here. If you can see on the form, you can either withhold 710, 12 or 22% now the final question is, Well, John, how much do I withhold? And that's something that if you're a do it yourself, Turbo taxer, you're going to have to find out, or you should just ask your tax professional or your financial professional, they can help you determine what amount you should be withholding or what amount you should be paying quarterly again, if, if it's keeping up with a conformity of the life you've been used to. You know, paying your taxes through your paychecks. The best way to do it, in my opinion, is to just withhold from any IRA account or Social Security account. If you're not going to withhold from your Social Security, then just make sure you're taking into account that perhaps 50 or 85% of your Social Security be six Social Security is and be subject to taxes and withhold increase your withholding a little bit more in those Ira distribution accounts or pensions. 

John, I love when we get to do a deep dive on these tax problems that I think a lot of people don't know even exist. But then to talk through some solutions as well is really valuable. If somebody would like to talk to you more about this, or just being more strategic in all of their tax planning, which I know is something we specialize in. How can they get a hold of you? Yeah, well, you can visit our website, www.gosecurus.com, we have a ton of on taxes and and, you know, social security on our website. We also have podcasts. And while you're on the website, if you want to come in and either schedule a 20 minute phone call or schedule an hour vision and clarity consultation, you're just going to simply click on that contact us tab, and it'll take you to my calendar, and you can schedule either or, or, if you just have a simple one off question, you can shoot us an email at info, at www.gosecurus.com and we will try to get back to that email as soon as possible. Right? John, thank you. Erin. You.