Have a Tax Question? Ask a Tax Expert
I am thinking of retiring. My retirement check will be $3,100 per month. How much will they take out for Federal Income Tax, Medicare, and OASDI? Why is it that I paid it once when I made it, and now I have to pay it again when I draw my retirement check?
Your retirement income will not be subject for the social security or Medicare taxes.
However, it will be your taxable income (unless you had after-tax contributions into your retirement fund).
Assuming $3,100 will be from your retirement plan (not from SSA) and that will be your only income - your total gross income will be $3,100 * 12 = $37,200.
If you are single, under 65, do not itemize, do not have any credits or deductions - your 2008 taxable income will be $37,200 - $5450 (standard deduction) - $3500(personal exemption) = $28,250.
Your taxes will be 10% on the first $8,025 plus 15% on $28,250-$8025=$20,225 - total $802.5 + $3033.75 = $3836.
You may need to file the form W4P - http://www.irs.gov/pub/irs-pdf/fw4p.pdf with the administrator of your retirement fund.
I am married, and my husband makes in the neighborhood of $60,000 a year. We file jointly. My concern now is not what to do when filing our yearly income tax. My concern is whether or not I will have enough money after taxes and social security and OASDI are taken out of my check to to pay my bills. I've been told that with social security leveling, I will make $3,100 before taxes. Please, do you have any idea how much will be left after they take out for everything? I also have to pay $500 a month for insurance.
Your retirement income will not be subject for the social security or Medicare taxes - there will be only federal income tax due from your retirement income
I assumed that you do not receive social security benefits.
In your income level - your estimated tax liability will be 15%. You may estimate $3100 * 15% = $465; so your estimated net retirement income will be #31000 - $465 = $2635.
Yes and thank you.
Please be sure to file the form W4P - http://www.irs.gov/pub/irs-pdf/fw4p.pdf with the administrator of your retirement fund - so your federal taxes will be timely withheld - otherwise you might owe taxes at the tax time.
I wish you the best.