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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19021  
Subject: Re: Q - Estimated Taxes Date: 8/22/2000 4:06 PM
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Greetings, Jim, and welcome. You asked:

<<I'm hoping to take the big plunge into "R" next year and am wondering: I've read that you have to pay estimated income tax on your last year's earnings. My retirement income from savings etc. will only be around 40% of that. Do I take a really big hit on this years earnings or pay estimated taxes on what I will actually be drawing? >>

Well, that's an interesting water cooler myth if ever I heard one. :-) Be assured that you must pay income taxes only on what your taxable income will actually be for the year. And as to paying estimated income taxes, that really depends pretty much on what you elect to have withheld from your paycheck and any retirement plan distributions. Chances are, you won't have to pay a nickel in withholding during your last year of work, but only you know what your projected income and withholding will be, so only you can determine whether you will need to file estimated withholding taxes for that year.

Regards..Pixy
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