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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29963
Experience:  Taxes, Immigration, Labor Relations
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I have a fixed annuity....I need to withdraw much of it

Customer Question

Hello...I have a fixed annuity....I need to withdraw much of it ...Great American ins. co...they advise IRS of my witdrawal...I don't want to pay much income tax...CAN I HAVE WITHDRAWAL TAKEN NOW FROM MY SOC. SECURITY OR PENSION INSTEAD OF AT TAX TIME WHEN I NEED TO PAY MORE?
Submitted: 2 years ago.
Category: Tax
Expert:  Lev replied 2 years ago.

Yes - you may request NOT to withhold any income taxes>
To do so - you need to provide form W4P to the administrator of your annuity.

Expert:  Lev replied 2 years ago.
The United States income tax is a pay-as-you-go tax, which means that you must pay tax as you earn or receive your income during the year. You can do this either through withholding or by making estimated tax payments. If you do not pay your tax or you pay an insufficient amount of tax through withholding, you might also have to pay estimated taxes. If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and estimated tax payments, or if they paid at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller.
If you expect to owe more than $1000 in federal taxes - you may choose larger withholding from any other payments - such as your pension and/or social security benefits.
Or you may choose to make estimated tax payments.
Let me know if you need any help with that.