What is the tax rate on military retirement

[ka-olafson]

I had approx 18,000 for my military retirement and they already with-held 1073, but after entering my 1099-r my refund dropped almost 1000 dollars. I want to know how my 1099 is getting taxed and if I am getting charged for penalties as early withdrawl?

[DoninGA]

The military retirement income reported on a Form 1099-R is entered as ordinary income on your federal tax return and is taxed at your current tax rate.  See this DFAS website - <a rel="nofollow" target="_blank" href="https://www.dfas.mil/retiredmilitary/manage/taxes/isittaxable.html">https://www.dfas.mil/retiredmili...>

[VolvoGirl · Accepted solution]

The 1099R will add to your other income and may put you into a higher tax bracket.  And with a higher income you may lose some credits you were getting like the EIC.  What code is in box 7?  There should not be any Early Withdrawal Penalty on it.

[ka-olafson]

normal distrbution

[ka-olafson]

code 7 in block 7

[desikeegie1085]

Early withdrawal within the first 2 years is taxable upto 25% and 10%the years after

[VolvoGirl]

What?  Never heard of that.  Please explain that.

[desikeegie1085]

It was something that President Obama put in place last year as a draw back to early withdrawal of any retirement including military and Roth IRA