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I assume that you receive $23,000 in social security benefits - correct?
That is not annuity income?
your other income is $10,600 in wages - so your social security benefits are not taxable and there is NO tax liability.With additional 401k distribution - there will be two possible affects
- a part of your social security benefits might become taxable
- because of larger gross income - you might have tax liability.Please stay with me while I am running calculations and will update you shortly...
Assuming you take 30,000 in distributions from 401k in this case your adjusted gross income woudl be $53485
-- 30,000 401k distributions
-- $10,600 in wages
-- $12985 taxable part of social security benefits (out of $23,000)
Your standard deduction would be $15,100 (including additional deduction because you are above 65)
and Personal Exemptions $8,000So - estimated Taxable Income $30,385
and expected federal income tax liability $3635
That woudl be fair if you need large distribution.If you want to avoid any federal tax liability - you distribution should be lower...
For instance - with $20,000 distribution from 401k - your estimated federal income tax liability woudl be $1255.
But if you take ONLY $11700 out of your 401k plan - your estimated federal income tax liability woudl be just $10.So if you do not need all your money - you may plan future distribution every year - and effectively avoid tax liability.
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