state tax exemption

[hipster dufus]

i believe GA exempts the first 35k of a pension in the year u turn 62. am i correct? iam setting up my state tax witholding for nxt yr and need to verify this. i will turn 62 in feb. TIA

 

[Jim Baker]

I think that is right $35K at 62, 65K at 65. But those are on passive incomes not earned.

https://dor.georgia.gov/retirees-faq#:~:text=Yes.,first $4000.00 of earned income.

Best to talk with a tax professional.

 

[Milkman]

Is this the first $35,000 of each pension or the total of pensions??

 

[Oldstick]

If I am not mistaken, it is off the total pension amount that each individual has received. If joint filing where both are 62+, then both get to claim the 35K off pensions in their names.

 

[ucfireman]

I didn't think pensions were taxed as they are not "earned income".

 

[Oldstick]

I didn't think pensions were taxed as they are not "earned income".

That depends on the type of pension. In my case, part of mine is not taxable right now, because a certain portion of it is funded by my own already taxed money while working. But after a few years, all of that will be gone then my pension will 100% taxable income.

IRA/401K distributions are probably all taxable if you got a tax deduction on your contributions.

 

[ucfireman]

No I'm talking about a company funded defined benefit type. A true pension. My department has a fully funded city pension after age 55. We contribute nothing to it.

We also have the 457 that we do pay into either pre tax or after tax. Im doing the ROTH type now but had about 12years of traditional before. (they didnt offer ROTH when I started)
I know the self funded pensions and traditional IRAs are taxed due to being tax deferred when it goes in.
ROTH IRA on the other hand is after tax and growth is tax free. Plus you can get your contributions out before retirement if needed as long as they were in for 5 years.

 

[Oldstick]

That's exactly what I mean, pension plans have different scenarios. Take Jimbo's advice above and consult professional's if they don't explain it clearly to you when the time comes.

 

[hipster dufus]

10% of my pension each yr is exempt because it is my contributions. This will slowly disappear.the yr i turn 62 i hav been told is when the state exempts the first 35k.

 

[Milkman]

What about SS pension? Does this apply to it as well?

 

[Oldstick]

10% of my pension each yr is exempt because it is my contributions. This will slowly disappear.the yr i turn 62 i hav been told is when the state exempts the first 35k.

That's exactly the same situation I have. I took the 35K deduction on the state when I filed last year, 2020. Because I had turned 62 in Oct of 2019.

So most likely your 1099 form shows the total amount you got, then shows how much of that is considered taxable. You only have to report that amount as taxable income, then you get to deduct the 35K from that amount on the state form. It gets better for both state and federal after you reach 65.

Social Security, is getting into areas I am a lot more fuzzy on. I remember looking into it for my now deceased in-laws a few years ago. If I recall, they weren't even required to file a return, only because SS was their only source of income AND it was below some $$ amount. But definitely don't take my word on that.