See Form IT2104.1, New York State, City of New York, and City of Yonkers Certificate of Nonresidence and Allocation of Withholding Tax. Workers' Compensation Benefits are not subject to withholding, Social Security, or Medicare taxes.Using Form W-4 to figure withholding. Electronic system to receive Form W-4. State law provides 2 tax benefit programs for senior citizens and persons with disabilities. They include property tax exemptions and property tax deferrals. If you receive SSI, then your benefits are not taxable. Request to withhold taxes. Submit a request to pay taxes on your Social Security benefit throughout the year instead of paying a large bill at tax time. Because federal income tax withholding is only required when a payment is includi- ble in income, no federal income tax should be withheld from these payments.