taxes. income taxes n tax basics effective and marginal tax rates n what is taxable? pensions and...
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![Page 1: Taxes. Income taxes n Tax basics Effective and marginal tax rates n What is taxable? Pensions and annuities Other income Home sale gains n Paying](https://reader035.vdocuments.us/reader035/viewer/2022081421/56649e0d5503460f94af6993/html5/thumbnails/1.jpg)
Taxes
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Income taxes Tax basics
Effective and marginal tax rates
What is taxable? Pensions and annuities Other income Home sale gains
Paying taxes in retirement Withholding Estimated taxes
State taxes
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Effective tax rate = Tax
Taxable income
Marginal tax rate = Rate applied to your last taxable dollar
Useful for figuring after-tax return
Basic concepts
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See IRS Publication 575 - Pension and Annuity Income
What is taxable?
Your City pension
Deferred Compensation Plan distributions
Social Security
Home sale gains
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Your City pension
Partially tax-free as return of your after-tax contributions
After recovery of after-tax contributions, pension is fully taxable
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Deferred Compensation Plan
All distributions fully taxable in year received
No early-withdrawal penalties
Can be rolled over into an IRA
Three-year catch-up provision available within three years of retirement eligibility
Age-based catch-up available to employees 50 years of age
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Rules on IRAs
10% federal penalty on withdrawals before age 59-1/2
2.5% California penalty
Must start withdrawing from an IRA by April 1 of year following age 70-1/2 according to formula
50% penalty on underwithdrawals in year following age 70-1/2 or later
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Social Security Up to 85% may be taxable if income exceeds
certain level
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Home sale gains
Exclusion available for capital gain Conditions
Owned home two of last five yearso Lived in home two of last five years o Have not used the exclusion in two-year period
ending on sale date
Amount Single: $250,000 Married: $500,000 (if both meet the “lived-in-it” and
“have-not-used” requirements; otherwise $250,000)
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Paying your tax
Timely payment required
Penalty for late payment
Withholding
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* Other percentages may apply to certain high-income taxpayers
Paying your tax
Estimated tax payments
No penalty if: Less than $1,000 owed at filing time 100% of previous year's tax amount paid* 90% of current year's tax paid
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State taxes State income tax treatment
of retirement income varies Consult a local state tax
expert California income taxes
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