My wife and I are 62 years old and both of us recently retired. She started collecting a monthly pension of $700 in January and is not having any federal or state taxes being deducted from her monthly check. I recently retired from a high paying job and started a part time job earning $11/hr. I work about 24 hours/week and also have no taxes being deducted from my checks.
I know the tax system is pay-as-you-go. Based on some "back of the napkin" calculations, I figure our gross earnings for the year will be about $150,000 and we will owe about $17,000 in federal taxes. With my high paying job I have already paid about $26,000 in federal taxes this year, meaning we should get a refund next year of about $9,000.
My question is: Is it acceptable to continue to not have taxes taken out of my wife’s pension or my checks from the part-time job or do we need to have a small amount taken every check in order to continue to pay-as-we-go” for the rest of the year?
