Katie-P
Employee Tax Expert

Retirement tax questions

The way to figure your tax liability on your traditional IRA distribution would be to figure out what your marginal income tax rate would likely be each year. You can use our Tax Calculator here. Once you fill it out, it will show you a federal income tax bracket.

 

Let's say that you fill out the form and it returns a result of 22% in the tax bracket area. You take out $10k from your traditional IRA, and have 22% withheld for federal income taxes, which is $2200. That's the calculation. If you also have a state income tax on retirement distributions, you'd want to consider a state withholding amount as well (the amount to withhold depends on your state's income tax rate(s)).

 

It is wise of you to consider working with your income over the next four years to maximize the senior deduction, but I want to clarify that taking an IRA distribution now does not maximize the senior deduction for you, given that you are 67 now. What it possibly would do is maximize it in the future, if doing so would then reduce your required minimum distribution to where it would put you below the $75k single/ $150k married MAGI threshold to take the full senior deduction. And that scenario would only apply if the senior tax deduction was extended past year 2028.

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