SEPP question and non Taxable Income Question

[Baggi]

I apologize if this isn't the correct way to do this but I have two separate questions and I thought I'd put both in the same message.

1) This year in October I decided to do an annual SEPP. Which means I have to do it again next year and the year after, etc, in order to avoid the 10% penalty. Does it matter when during the year I do the SEPP? Since it was in October this year, does it need to be in October again next year?

2) What on my paycheck is not taxed? When my W-2 comes out next year and I make a total of 90k lets say, I'm usually not taxed on that entire amount. Usually there are different boxes and the largest box isn't usually the right amount, there's usually a smaller amount.


Not sure if I'm saying this correctly. For example, I'll pay around $5,000 in Social Security Taxes this year. Are those taxed? When figuring out my annual income, will SSN taxes be taken off the top, or will I pay taxes on those taxes?


I also pay state taxes that come out of my paycheck. Not income taxes, my state doesn't have income taxes, but I pay other taxes like medical leave tax and family leave tax, etc. Do those come off the top of my income?

Thanks in advance for any responses!

[VolvoGirl]

#2  Many paycheck deductions can be pre-tax.  It can be hard to figure out the taxable wages.   Your W2 may not match your pay stubs.  You have to wait to get the W2.  You might not be able to figure it out yourself.  

Social Security and Medicare deductions are part of your taxable wages.  Medical premiums can be pre-tax or included in wages.  401K contributions are not part of your taxable wages, unless they are ROTH 401K.  Pension plan deductions can be either way.  You would have to ask your employer how they figure the taxable wages in W2 box 1.

My husband worked for California state and I never could reconcile his paychecks to the W2.  

[SusanY1]

For your SEPP (Separate and Equal Periodic Payments) from your retirement account, you must take the same amount annually so you do not necessarily need to take the distribution in the same month.  Some brokerage firms may have their own rules about how they pay these distributions, though, so you could have some limitations based on firm policies.