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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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Are taxes taken out of retirement checks?

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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.

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Question

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?

Submitted: 8 years ago.
Category: Tax

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.

Lev and other Tax Specialists are ready to help you
Customer: replied 8 years ago.

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.

Customer: replied 8 years ago.

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.