If this is from a Traditional IRA then the taxable portion of the distribution will be included as ordinary income on your federal tax return and will be taxed at your current tax rate. Your IRA administrator will normally withhold 10% for federal income taxes. You can have the administrator withhold more or less federal taxes and also have state taxes withheld if needed.
You will receive a Form 1099-R for the distribution in January of the year following the distribution to be reported on your tax return.
State taxes on the distribution are dependent on your individual state tax code. Some states have retirement income exclusions for those over age 65.
You can use this TurboTax calculator to get an estimate of federal taxes owed or a federal tax refund based on the distribution and your other income, to include Social Security income - https://turbotax.intuit.com/tax-tools/calculators/taxcaster/
DoninGA,
My IRA is a Traditional one. I had Vanguard withhold 10% for federal and 10% for state. I was unable to use the tax calculator because we are retired and don't have W-2 wages just pensions and social security. Nevertheless, all of the information you provided to me is very helpful. Thank you so much for answering my question so quickly.
How much money is involved? 10% Federal might not be enough.
If this is from a Traditional IRA then the taxable portion of the distribution will be included as ordinary income on your federal tax return and will be taxed at your current tax rate. Your IRA administrator will normally withhold 10% for federal income taxes. You can have the administrator withhold more or less federal taxes and also have state taxes withheld if needed.
You will receive a Form 1099-R for the distribution in January of the year following the distribution to be reported on your tax return.
State taxes on the distribution are dependent on your individual state tax code. Some states have retirement income exclusions for those over age 65.
You can use this TurboTax calculator to get an estimate of federal taxes owed or a federal tax refund based on the distribution and your other income, to include Social Security income - https://turbotax.intuit.com/tax-tools/calculators/taxcaster/