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Roth account
income from rental property
social security
income from the state retirement system

Now I figure that the money in the Roth account will have no impact at all on income tax and that the 401(k) money and any income from rental property will be taxed as ordinary income. But I'm not sure about the other two. Is there a certain amount of social security that is receivable tax-free? (Even if I have taxable income from my other sources?) And if there is a cut-off point or income level beyond which tax must be paid, I don't know whether this would include money from the state retirement system, social security--in addition to any other income (like from the 401(k), but not from the Roth account, which I think of as having no impact at all on income tax), or what...

If there is a publication about this that I should read, or a good website to visit, please let me know.

Hmm. Whatever happened to "trade date or settlement date"?

You're right about the Roth, the 401(k) and the rental income. Keep in mind that qualified distributions from the Roth do not affect your taxes in any way, including determining AGI (important later).

Taxation of your pension depends on whether or not you contributed to it in after-tax dollars. See IRS Publication 575 for information about the "simplified plan" (no, they're not being ironic), through which you recover your after-tax contributions tax-free.

The 401(k), net rental income, and taxable retirement income, along with any income from taxable investment accounts, all add to your Adjusted Gross Income (AGI). A portion of your Social Security income may also be taxable. It depends on the amount of your other income. There's a worksheet in the 1040 instructions that you use to calculate how much, if any, of your Social Security is taxable.

I suggest you dummy up a 1040 using the assumed numbers from your retirement. It's really the only way you're going to be able to estimate what your tax is going to be.

Now for the kicker. If your state has an income tax, check the "Adjustments to Federal AGI" section of the state instructions. Many states treat part or all of retirement income differently from the Federal.

Phil Marti
VITA Volunteer
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