Taxpayer asks:
The military retirement has the Federal Withholding higher than the State Withholding.
This seems incorrect to me. We don’t have anything special applied or not applied. We live Va., not sure if that matters. I hope that is enough information. I just think the military did some calculations wrong.
Taxgirl says:
If you’re not sure that it’s right, ask them to explain it to you.
I am not familiar with the tax structure in Virginia, but I will say that the withholding for federal purposes is almost always higher than the state withholding where I live (Pennsylvania). This is because our state income tax rate is around 3% whereas the lowest federal income tax rate is 10% (assuming that you don’t qualify for a zero rate).
Additionally, some states fully or partially exempt certain kinds of retirement pay. That might be contributing to a lower withholding.
Again, I think your best bet is to ask for an explanation. It may be the case that you need to make an adjustment!
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
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I’ve been retired 11 years now and solved the withholding question years before I even retired. If you just have withheld enough to equal the same, or a little more, than you actually paid last year ; that takes care of it with no penalties applied even if you owe more come nest April 15th. (110%+ if you are in a high income group). No “Mickey Mouse” ‘other exemptions’, etc. to bother with. While still working, after April’s income taxes were paid, I knew just how much to have withheld for the rest of the year and the number of paychecks so I just had a specific amount withheld each pay period. For estimated taxes, now that i/we are retired, I just divide what was actually paid for last year by four and pay those equal installments for both state and fed. Simple!