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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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Gentlemen: Since 2005 I am on retirement-disability due to

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Gentlemen: Since 2005 I am on retirement-disability due to a rare and non-curable cancer (had 3 surgeries and I am on monthly chimo-treatments). I have Medicare and Medicaid. I do not have assets, pay rent and all the related living expenses from my only income which is the monthly SS check ($1,072.00) plus food stamps ($40.00). I do not have family and I am divorced. I reached 65 years last month (dob 05/05/1945). Now I am eligible to get some pension from a company where I worked for many years. They sent me papers to apply and among them there is the case of "Federal Income Tax Withholding" (form W-4P) as well as "State Income Tax Withholding" form.
I do not know what to do and very much appreciate your help on this matter. Sincerely XXXXXXXXXX

Hello JA Customer,


In order to determine if you will actually be liable for any taxes, or the amount you might owe, we would need to know how much your pension income will be each year. Can you please tell us how much you will receive each year from this pension fund?


Also, please confirm the state you live in.



Customer: replied 7 years ago.
Hello: I live in Florida. The monthly pension is $309.43. My problem and question is not only the tax matter but also if I will maybe loose Medicaid. I cannot loose Medicaid because I will not be able to pay the difference Medicare - as an example; the monthly treatment in the hospital is almost $15,000.00(!). If this would happen I prefer not to get the company pension. Thanks,

Hello again JA Customer,


Thank you for the additional information.


Since your pension will only be $309 per month, along with your SS income this gives you total income of $1,381 each month. In the state of FL, as long as your monthly income is below $2,022, you still qualify for Medicaid benefits. So you should not lose your Medicaid as a result of receiving this pension.


In addition, since the pension amount is only $309 per month, you will not be liable for any taxes on these benefits. You should simply check the box on line 1 of the

Form W-4P which indicates that you do not want any taxes withheld from your pension benefit checks.



Thank you JA Customer



Customer: replied 7 years ago.
Hi: Is this tax matter (not withholding and/or paying tax) related to federal and state?

Hello again JA Customer,


Yes, it is related to federal and state income taxes.


The Form W-4P is a standard form they send to everyone who is to receive pension benefits. If your pension benefits were higher than $10,750 for the year, then you would actually owe some federal tax on your benefits. But since your total pension for the year is well below that amount you will not be liable for any federal taxes. And living in the state of FL, you obviously have no state income tax issues.


So you simply need to check the box on line 1 to let the company know that you do not want any taxes withheld from these benefit checks.



Thank you once again



Merlo and 3 other Tax Specialists are ready to help you
Customer: replied 7 years ago.
Hi: I thank you so very much for your help. You cannot believe how much it helped 'talking' to you, not having to go somewhere (difficult for me), fast answer etc. I am very satisfied and will tell my friends. Sincerely XXXXX XXXXX

Thank you KK for using JA and I am glad this helped you.