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Are taxes taken out of retirement checks?

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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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: 9 years ago.
Answered in 22 minutes by:
5/27/2008
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,162
Experience: Taxes, Immigration, Labor Relations
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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.

Lev
Lev, Tax Advisor
Category: Tax
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Customer reply replied 9 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.

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Customer reply replied 9 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.

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