Ask The Taxgirl: Taxing Social Security Benefits

Taxpayer asks: If you have turned full retirement age and are receiving your retirement and also still working full time, how does this effect your taxes? Thank you. taxgirl says: This is a pretty common scenario these days – and a popular question! Once you reach retirement age, whether your Social Security payments are taxable depends on your filing status and how much other income you receive. Check your federal form SSA-1099 for the total of your benefits. Once you have that number, here are a few key points: If your only source of income is Social Security benefits, your …

Does President Obama Want To Tax Your Retirement?

President Obama plans to tax your retirement. That was the subject of an email I received this morning. Only it wasn’t quite on target. You see, while it’s true that President Obama’s budget proposal, which is to be released on April 10, has included a proposal aimed at retirement accounts, he’s not targeting my retirement account. Or likely yours (unless you’re reading, Misters Buffett and Romney). The plan, as explained to date, isn’t a direct tax either: the proposal would cap individual retirement accounts of high end taxpayers at $3 million. In terms of contributions, for most taxpayers in 2013, …

Withdrawal Deadlines Looming For Some Retirement Plan Owners

When you sock money away in your retirement plan, the appeal is that the money will grow tax-deferred and be available to you for “some day.” For many taxpayers, that “some day” is right around the corner. Taxpayers who reach age 70½ in any calendar year must generally begin making withdrawals by April 1 of the next year. That means that taxpayers who reached age 70½ during 2012 have until April 1 of 2013 (that’s next week!) to begin making those withdrawals. The April 1 deadline only applies to the first year; after the first year, you need to take …

Taxes From A To Z (2013): I Is For IRA Rollover

I is for IRA Rollover. An individual retirement account (IRA) is type of retirement plan that allows you to set aside money for later use. Depending on the kind of IRA you establish (traditional versus Roth), you can rely on tax-free withdrawals or tax-deferred growth in the future. (Quick caveat: since this topic can be complicated, this particular post focuses on rollovers to and from traditional IRAs. In some instances, these rules may be a little different for a Roth and other retirement plans so consult with your tax professional and financial advisor for more information.) Since IRAs offer certain …

Sunday Mailbag: The Hot as Hades Edition

According to the Weather Channel, it feels like 92 degrees right now. I firmly believe that it should never feel like 92 degrees in the evening in Philadelphia. On the plus side, after a grueling day gardening in the heat (hey, it had to be done), I now have the opportunity to sit down, check email and sift through the taxgirl mailbag. It’s surprisingly full for summer so if you’ve sent me a question, please be patient if you don’t see your answer. And do me a favor, okay? I know summer can be busy but please take an extra …

Hatch Seeks to Clarify Rules on Tax Levies

This week, Sen. Orrin Hatch (R-UT) announced plans that may rankle some of those in the public sector: legislation that would subject Thrift Savings Plans (TSP) to levies for back taxes. TSP is a defined contribution plan for federal employees and retirees as well as for members of the uniformed services. It shouldn’t escape notice that federal employees would include members of Congress. Why should you care? More than 279,000 federal workers and retirees owe more than $3.4 billion in back income taxes. My colleague, Bob Wood, has the details – including what percentages of those back taxes are attributable …

Ask the taxgirl: 401(k) Plans and Your Tax Return

Taxpayer asks: Never had a 401k before so I have to ask. If all I did was put money in, didn’t take any out. Do I have to file a 1099 with my 1040or can I just file regularly with the 1040ez I do normally? I only put in about 605.00. I file single and rent so don’t have much but payroll to file. taxgirl says: Nope, you don’t need to file your tax return with a form 1099 under those circumstances: you can go right ahead and file how you would file if you didn’t have a 401(k). In …