Income taxes on early retirement?

[brownred]

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

 

[Big_Hitter]

like Bob Dole said when asked "boxers or briefs?"

depends

The internet is a great way to get on the net. - Bob Dole

 

[LOL!]

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.

 

[Just_Steve]

I pay only fed taxes because I'm exempt from state taxes otherwise I would pay them too. No FICA.

 

[erkevin]

I am pretty sure you will not pay FICA taxes on your pension check.

State pension here- no FICA taxes

 

[brownred]

I guess what I am looking for is a % of what will come out of my pension check.

 

[Big_Hitter]

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

<--- so subtle sometimes no one gets it

Life is very important to Americans. - Bob Dole

 

[Just_Steve]

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.

 

[LOL!]

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.

 

[Big_Hitter]

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

I believe we are on an irreversible trend toward more freedom and democracy - but that could change. - Dan Quayle

It isn't pollution that's harming the environment. It's the impurities in our air and water that are doing it. - Dan Quayle

 

[SteveNU]

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.

Sent from my Nexus 6P using Early Retirement Forum mobile app

 

[Cobra9777]

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.

 

[ronin]

I have 20% withheld from our pensions. It's never enough. Cap gains and dividends, etc. Plus partial Roth conversions. Tough problem to have.

 

[DrRoy]

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.

 

[RE2Boys]

I guess what I am looking for is a % of what will come out of my pension check.

See: https://www.irs.gov/individuals/international-taxpayers/pensions-and-annuity-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.