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Income taxes on early retirement?
Old 07-22-2016, 02:54 PM   #1
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Income taxes on early retirement?

Hello, I am getting the bug to retire early on January 1st at 57 1/2. Are the taxes on my pension check going to be the same rate as I pay now?

Thanks
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Old 07-22-2016, 02:56 PM   #2
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like Bob Dole said when asked "boxers or briefs?"

depends

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Old 07-22-2016, 03:04 PM   #3
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Hello, I am getting the bug to retire early on January 1st at 57 1/2. Are the taxes on my pension check going to be the same rate as I pay now?

Thanks
I am pretty sure you will not pay FICA taxes on your pension check.
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Old 07-22-2016, 03:15 PM   #4
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I pay only fed taxes because I'm exempt from state taxes otherwise I would pay them too. No FICA.
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Old 07-22-2016, 03:15 PM   #5
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I am pretty sure you will not pay FICA taxes on your pension check.
State pension here- no FICA taxes
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Old 07-22-2016, 03:25 PM   #6
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I guess what I am looking for is a % of what will come out of my pension check.
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Old 07-22-2016, 03:29 PM   #7
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I guess what I am looking for is a % of what will come out of my pension check.
"boxers or briefs?"

you get to fill out a withholding form (like you do when you were w*r**ing) called a W4-P so it will depends on your number of elections

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Old 07-22-2016, 03:32 PM   #8
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I guess what I am looking for is a % of what will come out of my pension check.
More dependents less % just like your paycheck.
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Old 07-22-2016, 03:33 PM   #9
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Why not use your tax software to figure this out? Since you are used to filling out your own tax returns I would think you can change your income to what your pension checks would sum up to and see what income taxes you would have to pay.

For instance, if your pension checks sum up to $10,000, then I don't think you will pay any income taxes. But if your pension checks sum up to $500,000, then I think you will have to pay some income taxes. Your tax software can tell you the dollar amount.
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Old 07-22-2016, 03:37 PM   #10
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DW is FIRED - she doesn't have anything taken out of her pension check, they just hit us up at the end of the year - keeps the champagne flowing for 11.5 months

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Old 07-22-2016, 03:51 PM   #11
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I have to tell them what to withhold for federal and state taxes just like when I got a paycheck. I just use Taxcaster and Turbo Tax software to figure it out based on a forecast of my income which includes a pension, and withdrawals from a 401k. I just use the standard deduction knowing that I will itemize and also take into account a HSA deduction. It gets me pretty close and I'll get a refund due to my itemizing.

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Old 07-22-2016, 04:53 PM   #12
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We have zero withheld on both pensions. We do quarterly estimated payments based on the big picture. Too many other moving parts.

OP should perhaps check out taxcaster.
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Old 07-22-2016, 05:40 PM   #13
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I have 20% withheld from our pensions. It's never enough. Cap gains and dividends, etc. Plus partial Roth conversions. Tough problem to have.
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Old 07-22-2016, 06:32 PM   #14
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You will need to do an estimate of what your new annual income will be and then check the tax tables to see what the percentage is.
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Old 07-22-2016, 06:37 PM   #15
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I guess what I am looking for is a % of what will come out of my pension check.
See: https://www.irs.gov/individuals/inte...ty-withholding

You can elect to have zero withheld from your pension or some other amount by filling a W4P with your pension servicing office. Withholding is only mandatory from a pension if it is sent internationally.

However, keep in mind that if you under withhold and do not meet other criteria (such as safe harbor or estimated quarterly payments), you may be subject to penalties for not paying enough taxes through periodic payments.

I have nothing withheld from my pension but do file quarterly estimated tax payments.
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