Hi All,
I will be 72 in 2024 and have been living off my SSI and savings since I was 65. For 2023, I only received about 1200 per month for SSI before Medicare and my son will start to claim $5000 DCA under my name for 2023. Considering all these, can I withdraw 7000 from my 401k and offset the income tax from 401k to my standard deduction and net to zero taxes? When I put the 5000 on my tax, should it be under self-employed or other income?
Thank you.
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Q. I can withdraw 12500 from my 401k in total, and not pay income tax; right?
A. No. You can withdraw $8850. The $5000 net self employment income will be taxable. So, there is only $8850 (13,850 -5000 = 8850) of standard deduction left for the 401k distribution.
If you are receiving income for providing child care in your home then you report that income and expenses on a Schedule C for self-employment. If you have net income of $400 or more from self-employment then you will have to pay Self-Employment taxes, which are a separate tax and not included in federal income taxes.
SSI is Supplemental Security Income and is not from the Social Security Administration. It is designed to help aged, blind, and disabled people, who have little or no income; and. It provides cash to meet basic needs for food, clothing, and shelter. SSI is not reported on a tax return.
Social Security Retirement/Disability/Survivors benefits are reported on a form SSA-1099 and the benefits received are to be entered on a federal tax return. The benefits may be taxable depending on the amount of other income you have entered on your tax return.
Up to 85% of Social Security Retirement/Disability/Survivors benefits becomes taxable when all your other income plus 1/2 your social security reaches:
Standard deductions for 2023
Hi,
In this case, will I get a tax refund for taxes I paid for the 7000 401k withdrawal?
Thanks
Q. Can I withdraw 7000 from my 401k and offset the income tax from 401k to my standard deduction and net to zero INCOME tax?
A. Yes. But, you will pay self employment tax (social security and Medicare [FICA] tax) on the net self employment income.
Q. When I put the 5000 on my tax, should it be under self-employed or other income?
A. Self Employment, if you baby sit in your own home.
If you baby sit in the parent's home, you could be classified as a "household employee". Grandparents working as household employees are exempt form social security and Medicare [FICA] tax (there are exceptions).
Q. In this case, will I get a tax refund for taxes I paid for the 7000 401k withdrawal?
A. Yes. Instead, you should ask 401k plan administrator not to withhold any income tax, unless you want to cover the self employment tax , in advance.
Hi,
To get the full benefits of my standard deduction( I am filing as a single/widower)
I can withdraw 12500 from my 401k in total right?
12500(401k)+5000(self employed)+1200*6=24,700 which make my social security benefits not taxable.
So my taxable income will be 5000 self-employed not part of the standard deduction, and 12500 401k withdrawal offset against my standard deduction of 16450? Am I calculating this correctly?
Thank you!
we have no way of knowing if single is the proper filing status for you. (there is no filing status as widower even though Turbotax may phrase the question that way. It's single (at the top of the 1040 you'll see there's no box for widow/er).
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you file as single if unmarried or separated from a spouse, either by divorce or a separate maintenance decree.
if you had a spouse who died in 2021 or 2022 you file as single unless you met the tests for qualifying surviving spouse (QSS) (one test that must be met is that your home was the main home for a qualifying child or stepchild) If they died before 2021 QSS is not available
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you may file a joint return if on the last day of the year you both are:
a) married and living together
b) married and living apart but not legally separated or divorced
c) separated under an interlocutory (not final) divorce decree
d) living in a common-law marriage recognized by the state in which you lived
if your spouse died during 2023, you can file a joint return provided you meet one of the above tests through their date of death.
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if married in 2023 on the date of death of your spouse you can also choose married filing separately. Usually the worst option. if you're eligible for this filing status, depending on the other spouse's income a return may have to be filed for them.
Under this option, both taxpayers must use either the standard deduction or itemized
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as to the 401(k), it would seem the owner is over 59-1/2 so no early withdrawal penalty., we don't know if you are subject to the required minimum distribution (RMD) rules. if you aren't then you can withdraw whatever you like. if you are subject to the (RMD) rules contact the Trustee/custodian to make sure enough was withdrawn. The penalty for taking less is 25% of the shortfall, which can be reduced to 10% if correction is done timely
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the standard deduction you stated is for 2022 here are the 2023 numbers
Joint return or QSS $27,700 + $1,850 for each taxpayer who is age 65 +$1.850 for each taxpayer that is legally blind
single $13,850 same addition deduction for age 65 and/or blind as above
married filing separately $13,850 +$1,500 if age 85 or older + 1500 if blind
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the standard deduction is just a deduction against adjusted gross income which includes all taxable income:
401(k), self-employment income. based on $17,500 in income (your $7,200 of Social Security won't be taxed.
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with $5,000 of self-employment income you will pay about $700 in self-employment tax
Q. I can withdraw 12500 from my 401k in total, and not pay income tax; right?
A. No. You can withdraw $8850. The $5000 net self employment income will be taxable. So, there is only $8850 (13,850 -5000 = 8850) of standard deduction left for the 401k distribution.
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