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Old 12-23-2016, 03:16 AM
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Tax Exempt Income

i am 66 but have been off work this entire year due to a work place accident. I draw $45,000 TAX FREE in workers Comp checks. I also receive $24,000 this year in social security.
I plan to retire in 2017, so would it benefit me to take some of my 401K out before the end of this year (2016) since I won't owe any taxes on my income.
I have a decent sized 401K that is mostly TAX deferred



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Old 12-23-2016, 11:57 AM
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Join Date: Oct 2010
Posts: 4,854
basically, If you have income from other sources besides Social Security, it is possible that a portion of your Social Security income will be taxable. Whether it is, and how much of it is taxable, depends on your marital status and your total income from all sources. your 401(k) withdrawal will be taxed at the various tax rates listed, depending on your filing status and the taxable income shown on your tax return.
The good news for you in your particular situation is that because you are older than 59 1/2, the 10 percent additional tax penalty will not apply.So you need to pay tax on yoru soc sec benefits aslongas your MAGI(50% of your soc sec benefits + 401K withdrawal income) is $32K for married couples filing jointly.
$25K for single, head of household, qualifying widow/widower with a dependent child, or married individuals filing separately who did not live with their spouses at any time during the year.
$0 for married persons filing separately who lived together during the year, then you may have to pay income tax on up to 50 percent of your benefits.If your taxable income is zero then you do not need to pay tax on 401k early withdrawal or on your social security benefits. For professional help I recommend you contact a n Enrolled Agent or a CPA in your local area



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