DOUBLE TAXING IF I TAKE RMD WITH OPTION TO HAVE FEDERAL TAX WITHHELD ?

[PhatFrancis]

Hi,

I am doing my own tax and a topic came up that I was hoping you can clarify.
For 2024, I took an RMD with the option to have federal income tax withheld.
Am I being tax double if I chose to have the federal tax withheld?

For example, My RMD for 2024 was $80,000. I chose  10% federal tax withheld which is $8,000. So $72,000 goes to me and the $8,000 to IRS. I have satisfied my RMD with the gross distribution $80,000. When I do entry for the 1099-R, I entered the total gross distribution of the $80,000  as shown in box 1, instead of the  $72,000 which is the amount deducted after 10% tax withheld. If I report the full RMD amount ( $80,000) would that mean I am taxed twice  (once when $8000 was deducte for fed tax  and now when I enter the gross distribution of $80,000 which is counted as my taxable income) .

Pleaseexplain if I am getting my thinking wrong.

Appreciate you advise

[VolvoGirl · Accepted solution]

When you take the withdrawal you don't pay the actual tax on it.  You have taxes withheld like from your paycheck.  The withholding is just an estimated amount.  At the end of the year you will get a form 1099R to enter into your tax return.  The withholding will be in box 4.  On your tax return you enter the full amount as income.  Then you get credit for the withholding on line 25b.  

You still have to enter the whole gross original amount (before taxes were withheld) with your other income to figure out the total tax (and it may put you into a higher tax bracket) and then the withholding is subtracted from the total tax to figure your refund or tax due. The gross amount shows up,on 1040 line 4a or 5a and the taxable amount on 4b or 5b.  The withholding will show up on 1040 line 25b.

[PhatFrancis]

Thank you  so much for your detailed explanation. I really appreciate the time you took to reply .