We are retired (me just last September) and realized that we are not taking enough taxes out when we pull money out of our IRAs. How should we estimate this so we are sure to take out enough?
Hi Cherylh861!
Unfortunately, there is no exact answer to that, because so much depends on what other income you have, what tax bracket you are in and whether the IRA distribution bumps you to a higher bracket.
The easiest (and keep in mind there is no exact way) way is to add up all of the income you think you will have for the year. By "we" I'm assuming you are married, but if not, this applies to singles as well). Then reduce it by the standard deduction ($13,850 single/$27,700 married) and apply it to the following tax table:
Use the percent that you see in the tax brackets that applies to you.
Again this is not an exact method, but a good conservative method that makes sure you withhold enough to cover your taxes. If you itemize, it gets more complicated, but you would just substitute the itemized deductions for the standard deductions in the calculations above.
That should at least get you close.
Good luck and let me know if you have any more questions.
Marty