General Tax Forms
- How is my income taxed?
- How do I determine the amount of taxes I should have withheld?
- I want to designate state tax withholding, but the state I live in does not require withholding. How can I request to have state taxes withheld?
- What is the difference between a W-8BEN and a W-7 Form?
How is my income taxed? Employer-sponsored retirement plan — Pre-tax contributions withdrawn from a tax deferred retirement plan are taxed as ordinary income. Any after-tax funds in the account are returned to you tax-free; however, the earnings from these after-tax contributions are still taxable. Some retirement plans allow for Roth contributions. If Roth contributions are made to the retirement plan, the contributions have already been taxed and the earnings can be withdrawn tax-free provided the date of the distribution occurs at least 5 years after the beginning of the taxable year in which the first Roth contribution was made to the plan (or its predecessor in the case of a rollover) and the participant is either (1) age 59½ or older or (2) considered disabled. For certain withdrawals considered under the Internal Revenue code to be rollover eligible, we are required to withhold 20% of the taxable amount withdrawn as a prepayment of taxes.
Additionally, withdrawals from employer sponsored plans taken before you obtain age 59½ may be subject to a 10% early withdrawal penalty (unless certain conditions are met).*
Individual Retirement Account (IRA) — Withdrawals from Traditional and SEP IRAs are generally taxed as ordinary income. However, if you have funded your IRA with non-deductible contributions, the non-deductible contribution portion of your IRA is not taxable upon withdrawal (earnings on the non-deductible contributions will still be subject to ordinary income tax). Withdrawals before age 59½ may be subject to a 10% early withdrawal penalty (unless certain conditions are met)*.
Withdrawals from Roth IRAs are tax free provided the date of the distribution occurs at least 5 years after the beginning of the taxable year in which the first Roth contribution was made to the plan (or its predecessor in the case of a rollover) and the participant is either (1) age 59½ or older or (2) considered disabled. Prior to meeting these requirements, any earnings withdrawn are taxable as ordinary income and may be subject to the early withdrawal penalty.
For lifetime annuity payments, fixed period annuity payments (setup for more than 10 years) and Minimum Distribution Option payments, there are no withholding requirements. This means you can either designate a flat dollar amount, a fixed percentage you want withheld, or opt to have no withholding from these types of distributions. If you do not make an election, we are required by the IRS to withhold 10% of your payments.
* An early withdrawal penalty does not apply if you meet one of the following conditions:
- Part of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of such employee and his designated beneficiary.
- You leave the sponsoring employer at age 55 or older.
- You have unreimbursed medical expenses that exceed 7.5% of your adjusted gross income.
- You are disabled as prescribed by IRS Regulations.
- The withdrawal is made by your beneficiary after your death.
- The withdrawal is made from an account issued through a Qualified Domestic Relations Order.
- The withdrawal is made for up to $10,000 to pay for first-time homebuyer expenses (IRA Only).
I want to designate state tax withholding, but the state I live in does not require withholding. How can I request to have state taxes withheld? You can include a signed and dated Letter of Instruction (LOI). You will need to provide your contract numbers and the dollar amount or percentage you want withheld from each payment.
What is the difference between a W-8BEN and a W-7 Form?A W-8BEN form is used to certify your foreign status and is required for a non-U.S. person or non-U.S. citizen living outside the United States. A W-7 form is used to request a taxpayer Identification number from the IRS if you are unable to obtain a Social Security Number. The W-7 form should be attached to your applicable 1040 tax return when filing your tax return with the IRS.