I am 62 and considering drawing my social security. I will earn about 14,000 in w-2 and will draw about 10,000 in 401k benefits. Will the 10,000 be taxed at a higher rate because I am 62
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You'll be close to the next bracket, but you should be okay. The $10,000 affects you however because it could make more of your Social Security income taxable. If you are filing Single and didn't have any 401K distributions, then none of your Social Security income would be taxable (based on the current rules). The IRS uses a formula to determine how much (if any) of your Social Security income is taxable. The taxable portion then gets added to your wages and other income to help determine your taxable income -- and thus your tax bracket.
As far as the 1-1 rule: In 2010, a beneficiary under the full retirement age can earn $14,160 and not lose any benefits. If earnings exceed this amount, $1 is held back from your check for each $2 earned above $14,160 for 2010 and for 2009.
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I am 62 and will be drawing about 18000 in benefits, w-2 wage will be 14000, and am considering drawing about 10,000 in 401k money. Will the 10,000 be at a higher tax rate because I am 62 and does the 1-1 rule apply to the 10,000
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I have my Bachelor's Degree in Accounting from the University of Houston. I also have an Enrolled Agent designation from the IRS. I have been providing accounting, tax preparation, and consulting services to individuals and small businesses for 15 years. My goal is to help you minimize your tax liability and navigate the ever-changing, complex tax laws. I also provide QuickBooks set-up and consulting for small businesses. View Profile
Oops...forgot to add that the $10,000 does NOT figure into the benefit reduction calculation (1-1 rule).
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