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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16559
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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my pension will be around $52,800 a year, my wifes pension

Customer Question

my pension will be around $52,800 a year, my wife's pension will be around $28,800 a year.
I have a part-time job that pays about $20,000 a year. Taxes are already being taken out of the part-time job checks. What % should I take out of the pension checks for federal income tax?
Submitted: 3 years ago.
Category: Tax
Expert:  Megan C replied 3 years ago.

MyVirtualCPA :

Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

MyVirtualCPA :

How are you today?

MyVirtualCPA :

Based on your information, you are in the 25% tax bracket. Therefore, I would have 25% of your pension checks withheld. This will cover your tax

MyVirtualCPA :

If you withhold 25% you will get a refund at the end of the year, as your marginal rate is only the rate at which the last $1 you earn is taxed.

MyVirtualCPA :

Your effective rate is 15.1%

MyVirtualCPA :

So, if you wanted to pay just enough tax to cover your bill, you should withhold 15%.

MyVirtualCPA :

Is there anything else I can help you with? If not, please rate as "excellent" so that I may receive credit for assisting you today

MyVirtualCPA :

Also, if you have social security earnings, 85% of those benefits will also be taxable based on your income level. Because of this, I would still lean towards withholding 25% of your pension checks to cover tax.

Expert:  Megan C replied 3 years ago.
Thanks for allowing me the opportunity to help you. Please let me know if I can be of any further assistance to you in this matter. I really enjoyed working with you – please feel free to request me again when you come back to ask another question. Simply enter "MyVirtualCPA" in the subject of your question Thanks again for being a JustAnswer customer