Income Tax Issues

Social Security withholds no money for federal or state income taxes unless you send in a specific form for that purpose. Since Emeriti generally receive income from two or more sources including CalPERS, Social Security, FERP salary, investments, etc., the total amount withheld from these sources may not be sufficient to cover annual state and federal income taxes.

This situation can be addressed either by requesting higher deductions on your CalPERS and Social Security income, or by paying quarterly estimated tax to the state and federal governments.

Consult with your tax adviser to determine which approach is best for you, but be aware that if you pay too little in taxes during the year through deductions and quarterly estimated tax payments, you may be subject to penalties.