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Thread: Want to get rid of tax benefit

  1. #1
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    Want to get rid of tax benefit

    I am a retired E7 (2012) at 40%. That leaves about $16,000 taxable, which is very little withheld. Since I have a job (GS9/11) the retirement on top of my salary and wife's pay really hurts at tax time. The way I see it, I have two choices to avoid another large tax bill; Increase my amount withheld of the taxable amount (which I am doing) or waive the benefit and make my entire retirement check taxable. Of course I want to maintain my 40% status for employment purposes.

    Interested in hearing what others do.

  2. #2
    Senior Member Bos Mutus's Avatar
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    Quote Originally Posted by Mata Leao View Post
    I am a retired E7 (2012) at 40%. That leaves about $16,000 taxable, which is very little withheld. Since I have a job (GS9/11) the retirement on top of my salary and wife's pay really hurts at tax time. The way I see it, I have two choices to avoid another large tax bill; Increase my amount withheld of the taxable amount (which I am doing) or waive the benefit and make my entire retirement check taxable. Of course I want to maintain my 40% status for employment purposes.

    Interested in hearing what others do.
    You have one choice to avoid a large tax bill....increase your withholding. I'm in a similar situation, working plus retirement check, spouse was working...I claim single and 0 exemptions on all, just to keep the withholding up.

    "Waiving the benefit", if that's even something you can do, makes ZERO sense, negative sense in fact. It will only raise your taxable income and your tax bill. Yes, it might also raise your withholding, but that's something you can do without increasing the actual tax you owe at the end of the year. The "tax benefit" is not what is hurting you at tax time, it's having 3 incomes and not withholding "enough".

    That said...the true bean counters will give you another option...keep things as they are, take the "extra" amount that is not being withheld and put it in an interest bearing account...then at the end of they year use that money to pay your tax bill while you get to keep the interest. That's great if you can figure it right and can stick to it...it's not always as easy to carry out as that extra couple hundred bucks always seems to find a need to fill during the year. So, if that's you, I'd just increase the withholding amount.
    Last edited by Bos Mutus; 10-08-2015 at 02:59 PM.
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  3. #3
    Senior Member Rainmaker's Avatar
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    Quote Originally Posted by Bos Mutus View Post

    That said...the true bean counters will give you another option...keep things as they are, take the "extra" amount that is not being withheld and put it in an interest bearing account...then at the end of they year use that money to pay your tax bill while you get to keep the interest.
    Where can Rainmaker find one of these "interest bearing accounts" that you speak of Mr. Yellen?

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