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In order to determine the actual tax on your pension distribution, you would have to estimate your total income and deductions for 2012. If 2012 is similar to 2011 the easiest way to make that estimate would be to add the gross distribution, the net plus the taxes withheld, to your 2011 income and see what the increase in income taxes are.
Do I need to have any federal/state taxes taken out from this check before I can use it?
If the withholding is insufficient, you will need to make estimated payments in order to have sufficient taxes paid in on your account. However, with the withholding that you have had on the distribution already, you would be able to pay any additional tax with your return without penalties or interest, as you will have had more paid in on your account (through withholding) than your actual tax for 2011.
You wouldn't be able to have any taxes taken out of that check.
As I said, the tax you will owe depends upon your other income & deductions for 2012.
so I would have to actually estimate what my total gross will be for this year including the pension check in order to get see what i will pay for next years tax return,sorry if I sound uneducated in this matter,just wanted to know what my options will be when I filed for next years tax return
Yes. Your income & your deductions. The tax on the pension distribution is not computed separately, so it isn't possible to just look at that without considering the rest. Are you over 59 1/2?
Well, have you considering rolling the distribution over to your own IRA? Otherwise you are going to pay both the income tax and a 10% penalty.
the reason why I closed this account is because I am currently about $40,000 in debt and needed to clear some of my bills
Well, chances are you are about $10,000.+ short on the withholding tax.
when I do kinda get an idea of what my total gross will be for this year, how do I find out how much i will owe?
Is it similar to 2011?
2011 I filed married filing joint,our total gross income was about $49000.00,we only got back about $841.00 federal and owed state about $219.00
my income varies depending if I'm working federal/state contracted jobs or regular pay jobs
I understand. If your gross pension distribution was $86,000., the penalty will be $8,600.
At that approximate level of income, the withholding on the pension will probably cover the tax; so if you set aside an additional $12,000. for taxes due with your return, you should be covered.
so far as of right now (just only my total income)to date is $27254.10 because I am currently on a state job contract. We don't own a home or have our own business,we currently have a 2 children,one graduating this year and one that is 2yrs old.so im guessing that I might have to pay a little more.
Well, you are having withholding from your wages as you earn them, so I believe the $12,000. will cover the additional tax & penalty due with your 2012 return.
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just a quick question before I let you go,the total amt of the check is $83139.98-$16624.00(irs withholding)= $66495.98. So that amt that was deducted is seperate from the 10% tax penalty?