Taxes on traditional IRA withdrawals

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Old 11-12-2018, 06:02 PM
queasy27 queasy27 is offline
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Default Taxes on traditional IRA withdrawals

I've been researching this online using estimated tax calculators and made myself even more confused. Any advice appreciated!

With SS income of $20K a year and no other income, is it possible to calculate how much tax I'd owe on traditional IRA withdrawals of $5K and $10K a year?

Age 67 if that matters.
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Old 11-12-2018, 06:16 PM
papasetti82 papasetti82 is offline
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https://www.ssa.gov/planners/taxes.html

Last edited by papasetti82; 11-12-2018 at 07:41 PM. Reason: mistake
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Old 11-12-2018, 06:25 PM
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Here is an article that may prove helpful especially the link for the worksheet to calculate Social Security tax liability.

Is Social Security Taxable? (2018 Update) - SmartAsset
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Old 11-12-2018, 06:44 PM
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Quote:
Originally Posted by queasy27 View Post
I've been researching this online using estimated tax calculators and made myself even more confused. Any advice appreciated!

With SS income of $20K a year and no other income, is it possible to calculate how much tax I'd owe on traditional IRA withdrawals of $5K and $10K a year?

Age 67 if that matters.
I would recommend you buy Turbotax Basic ($29.99 from Amazon or Staples). Then, you can plug in any combination of income options you want and also file your taxes at the same time.
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Old 11-12-2018, 06:49 PM
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probably nothing after standard deduction
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Old 11-12-2018, 07:16 PM
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Based on $20,000 of SS income and $15,000 IRA income, wit no other income, you won't have a tax liability.
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Old 11-12-2018, 07:48 PM
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Give me a call, no charge, I will explain it to you. Bob Bloom CPA 425 941 5224 I am available off and on tomorrow, leave me your number if I do not answer when you call.
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Old 11-12-2018, 07:57 PM
queasy27 queasy27 is offline
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Originally Posted by TomPerry View Post
Based on $20,000 of SS income and $15,000 IRA income, wit no other income, you won't have a tax liability.
Thanks. That seems to be the agreed outcome using all online tax estimators, but other sites say that half my SS would be taxable, for a taxable income of $25K and liability at the 10% level.

I prefer to believe the tax calculators!

I've used H&R Block online since it was introduced and will again this year, but I'm trying to figure out if it's better to withdraw $5K this year and $10K next, or just do the entire $15K next year.
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Old 11-12-2018, 08:01 PM
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Just give me a call. Continue using your software. I can just discuss it with you so you feel confident in your decision.
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Old 11-12-2018, 09:33 PM
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Quote:
Originally Posted by retiredguy123 View Post
I would recommend you buy Turbotax Basic ($29.99 from Amazon or Staples). Then, you can plug in any combination of income options you want and also file your taxes at the same time.
Go to the IRS site and look for a link to free software and us that to estimate your tax. If you are using last years software your tax will probably be too high.
The money you take from the IRA is taxed just as if it was wages so you can put it on the wage line if you can not figure out the correct retirement line which can be confusing due to ROTH's.
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Old 11-12-2018, 10:30 PM
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Originally Posted by rjm1cc View Post
Go to the IRS site and look for a link to free software and us that to estimate your tax. If you are using last years software your tax will probably be too high.
The money you take from the IRA is taxed just as if it was wages so you can put it on the wage line if you can not figure out the correct retirement line which can be confusing due to ROTH's.
It is not taxed as wages (earned income) as there are no deductions for social security. It is simply taxed as income.
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Old 11-12-2018, 11:40 PM
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Quote:
Originally Posted by retiredguy123 View Post
I would recommend you buy Turbotax Basic ($29.99 from Amazon or Staples). Then, you can plug in any combination of income options you want and also file your taxes at the same time.
Exactly what I would recommend.
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Old 11-13-2018, 03:32 PM
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+1 on talking to Bob Bloom. He's very helpful and knows all this tax stuff inside and out.
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Old 11-13-2018, 05:26 PM
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It is not taxed as wages (earned income) as there are no deductions for social security. It is simply taxed as income.
You are correct that their are not payroll taxes. But on the wage line for the 1040 you put the gross wages and the software will correctly compute the income tax. If you owe SS you would use form SE. My suggestion was just a quick easy way to get the answer he was looking for and not how to file an actual tax return.
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Old 11-14-2018, 09:49 AM
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I wonder if you are being confused because of the word "taxable". It does not mean there definitely will be taxes due, it means those dollars are not automatically tax free. So taxable means the dollars will be used to calculate your tax due, which could still be zero.
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