My water heater is leaking water from the top from the pipe connection. Do I need a new water heater or can I fix it?

Check all external pipes, includeing the ones at top. If you find no pipeing leaks, the odds are, depending on age and waranty, you
have an internal tank leak and need to replace. There is virtually no way to fix that kind of leak.

Hello Marcia

Unit is probably rusted out:
http://waterheatertimer.org/Leaking-water-heater.html

Reliance is AO Smith. I recommend the AO Smith line-up of water heater brands as best because air intake screen is located on bottom of unit and can be cleaned by homeowner without removing combustion parts, and because AO Smith posts service manuals.
http://waterheatertimer.org/How-to-install-gas-water-heater.html
http://hometips.me/Mar/WaterHeaterSerialNumberDecoder.pdf

Add a comment with more questions

If you need further help, I’m available over the phone at https://www.6ya.com/expert/gene_9f0ef4df2f9897e7

If tank is rusted out, then that is caused by depleted anode rod, or tank that is not electrically grounded on hot side pipe.
If pipe nipple is rusted out, then that can be caused by improper connection between copper and galvanized pipes, and caused by non-grounded hot water pipes.

If tank is leaking, replace it.
If nipple is leaking, remove with pipe wrench, apply teflon tape or joint compound on threads, and install new nipple. Replace anode rod if possible. Correct copper-galvanized connections. Add ground wire between hot and cold pipes.

http://waterheatertimer.org/Leaking-water-heater.html
http://waterheatertimer.org/Replace-anode-rod.html

If pipes are leaking, then that can be repaired.
If tank is rusted out and water escaping from the tank, then turn off the water plus power to the heater for safety, and then replace water heater.
Rusted water heater can be welded for repair, but remember that hot water is under pressure and tank can rupture any time.
Safest course if to replace heater.

Open following link for leaking water heater checklist:
http://waterheatertimer.org/Leaking-water-heater.html

I am uncertain from your description exactly where water is coming from.

I want you to protect yourself first.

Read following page to help identify source of leak:
http://waterheatertimer.org/Leaking-water-heater.html

If your vent pipe is spitting water back on top of water heater, then the problem is not the water heater. Problem could be poor venting.
Water heater is putting odorless CO gas into home, and will kill you. Give you headaches, make you feel sick until you go outside and get fresh air.

Call a plumber please if flue pipe is problem.

Here's how to check if flue pipe is drafting properly:
When water heater burner is off, light a match, blow match flame out, put match under vent hood on top of water heater.
Does smoke from match immediately draft up flue pipe?
If smoke does not draft up strong, then water heater is putting CO gas into home.

The vent on all gas appliances has to be working properly.
Look for missing top of vent pipe located on roof.
If cover is missing, a bird might built a nest on end of pipe, or leaves have fallen into pipe which is a fire hazard.

If flue pipe goes into chimney, you should call a plumber.
A plumber is cheaper than potential health problems with improper flue.

Add a comment for more free help.
Also take advantage of fixya phone service.
For a price, expert speaks with you over phone while you work on water heater or any do-it-yourself project.
Fixya is always less expensive than a service call.

If you have a leaking water heater there is a serious problem.
http://waterheatertimer.org/Water-heater-leaking.html
Page shows how to limp along on a leaking water heater if your water heater needs replacement.

One of three things is causing the water:
1) Loose water connection on top of tank that is dripping down inside tank >> check pipes on top of tank.

2) The vent is clogged or not working correctly causing condensation inside flue pipe.
Condensation water is dripping back down inside tank.
Problem means possible CO poisoning if gas is not venting.
Look at vent pipe to see if joints are corroded.
Use long fireplace match > light match and put into draft hood at top of tank and see if smoke goes up.
Put hand at draft hood opening when water heater turns on to see if vent gas enters home.
Do same test when furnace turns on to see if furnace vent is pushing back into water heater.
Does water heater vent inside same pipe as furnace? You may need to set up separate vent for water heater if furnace gasses are pushing back into home.
Check furnace vent for obstructions.
Look at vent stack top of home to see if hood is in place.
Check if bird nest is built inside warm vent pipe.
Improper flue is top priority for getting fixed so vent gasses properly escape home.
You may have to call a plumber.
Professional plumbing forum:
http://www.thetankatwaterheaterrescue.com/forums/forum3/

3) Your water heater is rusted out.
A rusted tank has to be replaced.
It cannot be repaired.
However, before replacing tank, you do not want a tank failure where tank ruptures and water runs inside home until water is shut off.
This will cause major damage.
Protect yourself first.
Turn off water valve above tank.
Move gas knob to 'pilot' so burner is not heating water.
Open tub spout on hot side to relieve pressure on tank so it will not rupture.

Now you're protected.
Link above shows how to limp along on failed tank until you can replace heater.

You need a new gas water heater from Lowes or Home Depot
Look at label on side of you tank for gallons and btu's of your water heater.
Measure height to flue pipe so you get same height water heater, so pipes don't have to be changed.
You need a pipe wrench and teflon tape which will be wrapped on each pipe thread when pipes are reassembled.

Step1) Drain water heater using valve at bottom of tank.
http://waterheatertimer.org/Water-heater-will-not-drain.html

2) Turn off gas valve going into heater.
When gas valve is perpendicular to gas line, then gas is off.
Dissemble gas line to water heater.

3) Disconnect flue pipe and support flue pipe with wire so it doesn't not fall down. Flue pipe joints should be held together at each joint with 3 screws.

4) Turn off water. Shut off valve is on COLD side.
Disconnect water pipes.

5) Move old water heater out of way.

6) Set new water heater in place. Put water heater in drip pan.

7) Connect water pipes >> cold goes to side marked cold.
Hot to hot.
Buy new flexible water connector pipes at home center for easy installation of water pipes.

8) Connect gas line exactly as it was connected before.
Home center sells flexible gas line connector for easy installation of gas line.
To test for gas leak after installation, mix liquid soap with water and put around gas line joints to see if there are bubbles.
Natural gas has less pressure than water lines, so gas pipes are easy to seal with ordinary wrench.

9) install TP pipe that runs to floor. Use old one off old heater.

10) Fill tank completely with water until water is coming out of tub spout.

11) Turn on gas, and light pilot as shown in manual.
New gas heater sometimes have small water leak when first fired up, so ignore a bit of water.

12) Save water heater manual like it is gold, and read everything in manual.

It sounds like you need to replace it, Actual cost can very widrly depending on your location but I would say $350-400 is probably close. Plus installation unless you can do it yourself. Hope this helps. Thanks

It sounds like two problems.
Problem 1) Clog inside faucet or clog inside pipes at faucet
Remove supply tubes leading to faucet and see if problem is inside pipes or inside faucet.
My bet is clog inside faucet.

If you have galvanized pipe that meets copper pipe, this can be trouble spot.
Article on clogged water pipes at Inspectapedia:
http://www.inspectapedia.com/water/Water_Pipe_Clog_Repair_Guide.htm

Article on clogged pipes:
http://www.waterheaterrescue.com/pages/WHRpages/English/Troubleshooting/Tanklets/backflushing.html

Problem 2) Water heater leak ... you say tank valve is leaking? Is that cold-water shut-off valve? Or tank drain valve? Or TP valve?

If cold water shut-off is leaking, then replace shut off.

If tank drain valve is leaking, then check if plastic valve is cracked. If drain valve is cracked, then replace with a brass valve from Home Depot. If plastic valve breaks off, then use hammer and screwdriver to gently chip out the broken plastic valve. New valve threads need teflon tape to seal pipe. If valve is just dripping, then put garden-hose cap over end of valve and screw down tight.

If TP valve is leaking, then replace with same temperature and pressure rating. New TP valve threads need teflon tape to seal pipe.

Problem 3) If pressure is low all over house:
Buy pressure gauge at hardware store that screws onto hose connection.

Test pressure on outdoor spigot.
Open faucet and check if pressure drops. This says if problem is inside pipes that enter house.

Test pressure on water heater drain valve.
This says if pressure problem is before -or- after water heater.

If problem is before the water heater, then shut-off valve located on cold water line is suspect.
If problem is after water heater, it could be in hot water outflow pipe on top of water heater, or a nearby elbow.
Remove hot water line leading from water heater and check pressure. This says if problem is where hot water leaves tank.
Read articles above about clogs inside water lines.

remove the nipples( pipe connections in water heater) and replace. be sure to use a good teflon tape and tighten with pipe wrench. they don't need to be torqued to 900 lbs, just tighten until it feels tight to you.
if it still leaks after testing, tighten a little more, don't overtighten!

If water is leaking from a pipe. then replace or repair the pipe or fitting. If the leak is coming from the unit itself, then replace the unit. Hope this helps.