How Do I Estimate Retirement Income Tax Withholding?
- 1). Write down all of your sources of income, both retirement and non-retirement income. Depending on your circumstances, this could include distributions from an IRA, interest from the bank, capital gains from sales of stocks or assets, social security payments and your monthly pension.
- 2). Check your bank statements, brokerage statements and pension stubs to see if any taxes have been withheld. Write down these tax payments if applicable.
- 3). Add up all your sources of income and the taxes withheld. Transfer that information to a blank 1040 form. You can download a copy of the 1040 form at the IRS website or you can obtain one from your local legislative office or public library.
- 4). Perform the calculations using the instructions on the 1040 form. This will give you an estimate of the taxes you are likely to owe at the end of the year. Contact your former employer if you wish to have taxes withheld from your monthly pension check. It is not always possible to do this, but some employers allow retirees to change the amount withheld from their pension checks.
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