401k

[basshunter58]

In 2024 the standard deduction will be $14,600 for single filers, I will be 62 this year. If I withdrawal $14,600 from my 401k, will the distribution be offset by the standard deduction making my AGI $0?

[MinhT1 · Accepted solution]

Yes, if you have no other income in 2024, the standard deduction will reduce your taxable income to 0.

Your AGI will be $14,600, but your taxable income will be 0.

[basshunter58]

The only other income I will have would be social security. I will not be receiving my first payment until April, so I don't know what the total amount for the year will be at this point.

[Vanessa A · Accepted solution]

If you will also have social security, then you would end up having taxable income.  At minimum half of your social security will be taxable since you would have other taxable income. Depending on your situation, up to 85% of it is taxed.  

For instance, if you are single and if your withdrawal is $14,600 and you receive $15,000 in social security for the year, then you would have combined income of $22,100. Which would leave you with taxable income of $7,500.

If you fall into the following, 85% of your social security is taxable income

• Single with income above $34,000
• Married Filing Jointly with income above $44,000
• Married Filing Separate regardless of income

If you fall into the following, 50% of your social security is taxable income

• Single with combined income between $25,000-$34,000
• Married Filing Jointly with combined income between $32,000 and $44,000

Your combined income is calculated by adding your

• AGI plus
• Nontaxable Interest plus
• 1/2 of your social security Benefits

Social Security Benefits Taxes

So, with SS and that withdraw, your AGI will not be $0. 

[Opus 17]

@Vanessa A 

@basshunter58 

I'm not sure those calculations are quite correct. 

If you are single and if your withdrawal is $14,600 and you receive $15,000 in social security for the year, then your "combined income" for determining tax on social security is $22,100.  Since that is less than $25,000, none of your social security would be taxable, and since none of your social security would be taxable, your AGI of $14,600 would be covered by the standard deduction.

However, if you are closer to the social security maximum, let's say $3000 per month benefit ($36,000 per year), then your "combined income" would be $14,600 plus $18,000 = $32,600.  That will make 50% of your social security taxable, and your AGI would be $14,600 plus $18,000 = $32,600.  $14,600 is covered by the standard deduction and the remaining $18,000 would be taxed at 10-12%.