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Topic 410 Pensions and Annuities, Form W – 4P & IRA - YouTube
Channel: Maths Platter
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if you receive retirement benefits in
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the form of pension or annuity payments
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from a qualified employer retirement
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plan all or some portion of the amounts
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you receive may be taxable this topic
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doesn't cover the taxation of Social
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Security and equivalent railroad
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retirement benefits for information
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about tax on those benefits refer to
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tropic 423 and our my Social Security or
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railroad retirement DRI benefits taxable
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an IRS website the pension or annuity
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payments that you receive are fully
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taxable if you have no investment in the
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contract sometimes referred to as cost
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or basis due to any of the following
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situations you didn't contribute
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anything or aren't considered to have
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contributed anything for your pension or
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annuity your employer didn't withhold
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contributions from your salary or you
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received all of your contributions
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tax-free in prior years
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if you contributed after-tax dollars to
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your pension or annuity your pension
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payments are partially taxable you won't
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pay tax on the part of the payment that
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represents a return of the after-tax
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amount you paid this amount is your
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investment in the contract and it
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includes the amounts your employer
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contributed that were taxable to you
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when contributed taxpayers figure the
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tax on partly taxable pensions by using
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either the general rule or the
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simplified method for more information
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on the general rule and simplified
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method refer to Tropic 411 if the
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starting date of your pension or annuity
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payments is after November 18 1996 you
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generally must use the simplified method
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to determine how much of your annuity
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payment is taxable and how much is
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tax-free if you receive pension or
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annuity payments before age 59 and a
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half you may be subject to an additional
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10% tax on early distributions unless
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the distribution qualifies for an
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exception the additional tax
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doesn't apply to any part of a
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distribution that's tax-free or to any
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of the following types of distributions
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distributions made as a part of a series
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of substantially equal periodic payments
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which begins after your separation from
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service distributions made because
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you're totally and permanently disabled
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distributions made on or after the death
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of the plan participant or contract
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holder and distributions made after your
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separation from service and an or after
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the year you reached age 55 for other
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exceptions to the additional 10% tax
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refer to publication 575 pension and
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annuity income on IRS website if you're
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a survivor or beneficiary of a pension
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plan participant or annuitant refer to
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publication 575 for rules relating to
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income inclusion the taxable part of
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your pension or annuity payments is
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generally subject to federal income tax
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withholding you may be able to choose
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not to have income tax withheld from
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your pension or annuity payments unless
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they're eligible rollover distribution
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Zoar you may want to specify how much
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tax is withheld if so provide the payor
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Form w-4 P withholding certificate for
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pension or annuity payments or a similar
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form provided by the payer along with
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your social security number if you're a
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US citizen or resident alien you must
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provide the payer with a home address in
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the United States to be able to choose
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to have no tax withheld payers generally
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figure the withholding from periodic
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payments of a pension or annuity the
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same way as for salaries and wages if
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you don't submit the form w-4 P
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withholding certificate the payer must
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withhold tax as if you were married and
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claiming three withholding allowances
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even if you submit a form w-4 P and
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elect a lower amount if you don't
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provide the payer with your correct
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Social Security number tax will be
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withheld as if you were single and
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claiming no withholding
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balances if you K your taxes through
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withholding and the withheld tax isn't
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enough you may also need to make
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estimated tax payments to ensure you
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don't underpay taxes during the tax year
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for more information on increasing
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withholding tax making estimated tax
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payments and the consequences of not
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withholding the proper amount of tax
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refer to publication 505 tax withholding
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and estimated tax on IRS website special
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rules apply to certain non periodic
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payments from qualified retirement plans
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for information on the special tax
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treatment of lump sum distributions
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refer to tropic 412 if you receive an
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eligible rollover distribution the payer
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must withhold 20% of it even if you
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intend to roll it over later you can
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avoid this withholding by choosing the
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direct rollover option a distribution
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sent to you in the form of a check
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payable to the receiving plan or IRA
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isn't subject to withholding for more
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information on rollovers refer to tropic
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413 for more information refer to
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publication 575 and is my pension or
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annuity payment taxable on IRS website
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