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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10104
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I am retired although working part time DoD Navy Exchange

Customer Question

I am retired although working part time for the DoD Navy Exchange part time as a rental clerk. The Excange offers a 401k which I take full advantage of by putting all of my paycheck in except for my contribution to the medical plan. After these deductions I usually take home about $14.00 every two weeks.
My wife and I file jointly with our only other income being about $3000.00 a month from social security.
I have saved about $27,000 in the 401k. I have about that amount of debt in credit obligations. I am planning on stopping work next April.
my question is, if I take all of this money out of the 401k to pay my credit off will I be taxed and if so, generally how much?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

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Yes, the money coming from the 401(k) is added to your taxable income for the year.

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This will make SOME of your Social Security (about $5000) taxable for the year

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Bear with me a moment and I'll run the numbers for you

Expert:  Lane replied 1 year ago.

Yes, based on the worksheet provided in the most recent IRS Publication 915, your Social Security benefit(s) of $30,000 will be 17% taxable increasing your taxable income by $5,000.

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That makes for a gross taxable income of 32000

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Then see this:

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Summary Table

Estimated Tax Analysis

Gross income$32,000

Qualified plan contributions-$0

Adjusted gross income=$32,000

Standard/Itemized deductions-$12,600

Personal exemptions-$8,000

Taxable income=$11,400

Tax liability before credits$1,140

Child tax credits-$0

Estimated tax liability=$1,140

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Expert:  Lane replied 1 year ago.

Pease let me know if you have any questions.

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Lane

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Expert:  Lane replied 1 year ago.

Hi

...

Just checking back in to see if you saw my answer

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Let me know if you need more here.

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Lane

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If this HAS helped, I'd appreciate a positive rating, by clicking or touching, the smiles or stars on your screen ... that's the ONLY WAY I'm credited for the work here.

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Thank You