Posted by Dave H (MI) on January 30, 2015 at 19:15:36 from (50.108.79.234):
In Reply to: Retirement taxes posted by vscummins on January 30, 2015 at 17:26:04:
Well, to quote John T once again...this is a pretty serious and potentially complex area and asking Billy Bob and Bubba on a tractor forum is really not a good plan. Lots of opinions, not many of them backed up with credentials or, sometimes worse, limited credentials. You are not specific about the SOURCE of the cash inflow. The source and the amount from all sources will determine tax. The one interesting thing you said was that "she paid tax on it going in". In general, you only pay tax on income one time. So if her money is in (after tax) savings she will not pay tax again. Deferred plans are generally taxable coming out because you did not pay income taxes on them when they went in. Some plans will have a component that was put in after tax and this will be separated out by the fiduciary when they issue the tax statements so that she does not pay tax on them again.
Now the one glaring example of double taxation can be social security income. You definitely paid income tax on the money that went to social security. In some situations, and I am not going to work examples or give you specifics, social security can be taxable. The max they tax is 85% of it and it generally occurs when income reaches $30-40K range...again, speaking in generalities. This is real good time to invest in a good local CPA who, like me, has a lot of clients retired and living the good life because someone makes sure they have all the bases covered. All these sources of income give you the ability to have tax withheld from your payments. DO NOT let mom retire without talking to someone about this, getting a plan set up to keep her from owing big money with her return. Hope this helps. Once you talk to a local guy, if you are not understanding something. Drop me an email and maybe I can clear the water a little.
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