topic Which option will this be taxed under in Retirement tax questions

Which option will this be taxed under

Hacdufall — Sat, 25 Dec 2021 17:52:16 GMT

How will funds from a Traditional IRA be taxed if I do a withdrawal? The funds are invested into a Mutual fund.

Qualified dividends, Interest or IRA/Pension distributions.

Re: Which option will this be taxed under

SteamTrain — Sat, 25 Dec 2021 17:57:18 GMT

It will be IRA/Pension distributions.

Any interest/dividends or cap gains that the Mutual fund might have issued during the year, are considered to be within the IRA.....and anything you take out is considered as-if just a cash distribution.

Re: Which option will this be taxed under

Hacdufall — Sat, 25 Dec 2021 18:09:11 GMT

I ran the numbers using the turbotax calculator and I put in a hypothetical number ($50k) and it shows no fed tax is owed why is that? This is using a hypothetical Social Insurance Benefits number ($21,500)

Re: Which option will this be taxed under

Critter-3 — Sat, 25 Dec 2021 18:51:52 GMT

Did you enter the IRA distribution correctly ?

Re: Which option will this be taxed under

Hacdufall — Sat, 25 Dec 2021 18:57:42 GMT

Sorry. I forgot to mention when I put the $50k in the Interest box it shows no tax owed.

Re: Which option will this be taxed under

Critter-3 — Sat, 25 Dec 2021 19:00:17 GMT

EVERYTHING coming out of an IRA is taxed as ordinary income ... put the distribution in the correct box for a correct estimate.

Re: Which option will this be taxed under

Hacdufall — Sat, 25 Dec 2021 19:44:54 GMT

Right I think I follow now. I was just curious as to why there isn’t tax owed if I put the $50k in the Interest box.

Re: Which option will this be taxed under

Critter-3 — Sat, 25 Dec 2021 20:09:56 GMT

System is not fully functional for the 2021 tax year as it is being switched to the 2022 tax year since the 2021 tax program is operational. Note the spot for ordinary dividends is totally missing.