So I retired under FERS on 12/31/18. OPM just finalized my case and my first full annuity will be on 5/1/19. I've been receiving partial payments for the last several months and only a fraction of the Federal tax has been withheld. I used the IRS Withholding calculator but the numbers were not right. So I'm wondering if there is another method or site that would allow me to determine what I should withhold for each month going forward. I know OPM withholds at the married filing jointly with three exemptions, but I think that may be too much. Thanks for any info.
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Best way to determine the correct Federal withholding for annuity
- Thread starter scsiguru
- Start date
JMHO but the easiest method is to use the OPM withholding for the first year of retirement and adjust up or down as needed for year two. If you don't have any other income sources you are likely correct that you will be overwithheld but if your spouse works, either of you has outside employment, etc. might be off quite a bit. Good luck!
Thanks for the information. I agree...I'll just follow what OPM withholds and see how that works. I'm waiting until OPM makes the May 2019 annuity statement available and see the exact amount they will be withholding every month. I did get the full amount of my back retirement posted to my bank account this week so the May 2019 statement will reflect my regular monthly amount. FWIW, my wife retired under CSRS in 2014. It's been so long ago, I can't recall how we worked through the federal withholding then. But it has seemed to work out OK. I did adjust my state withholding yesterday and accounted for the 4 months of annuity payments where I did not have any state withholding. I'll make another adjustment for the January 2020 state tax since I'll have to account for the full year then. Also, my wife is working a part-time second job and has taxes taken out of her pay there. She doesn't make a lot, but it helps pay for her trips and shopping sprees. 
If OPM is withholding at Married 3 deductions you might not have enough taxes withheld and may owe next year. Scout is correct in saying to wait for year two, but be aware you may owe more than you think. Also it could be advantageous come tax time next year to look at married filing separate vs. married filing joint. Congratulations on your retirement.
Good information..thanks! I'm assuming that OPM is withholding at their default rate. I went through my retirement paperwork and didn't see any documentation about withholding so I'm assuming it just went to the default. I have been thinking about married filing separate and will have to run some numbers later this year to see if it's advantageous. Like I mentioned I'll have to look at my May 2019 annuity withholding and I may even make an upward adjustment to my Federal withholding just to be on the safe side. Will plug my projected 2019 numbers on a tax form and see how it plays out. Thanks for the retirement congrats! It's funny...I was only retired about a month and I was offered a job by a friend...I told him I didn't want to work that soon after retirement..LOL!!
I received my Retirement Benefits Book from OPM in the mail today. They are withholding "...at the rate applicable to a single individual claiming 0 withholding allowances". This is how my withholding was setup when I was employed with my agency. I'm now wondering if this withholding rate is too high?
Stating the obvious that with this withholding you will see less in your retirement check and a nicer refund. To be honest I would have to do some research to figure out where the middle ground would be such as; single 1 deduction, Head of Household 0 deductions or married 0 deductions, etc. for the W-4.
Yes..I plan to look at what would work best for my situation and adjust accordingly.
The best way to determine your payroll withholdings is going to get very complicated for 2020.
The New Draft Version 2019 IRS Form W-4 Is A Rage Inducing Abomination
Written by John Dundon | Posted in Draft Version 2019 IRS W-4
https://www.taxconnections.com/taxb...-is-a-rage-inducing-abomination/#.XK32uPlKhPZ
"The new ... W-4 relies on other non-wage income, deductions and tax credits as opposed to simple allowances like the good old days – you are now forced to share with your employer things that your employer may have previously not known about you or worse still…things that you may not want your employer to know about you! ..."
"The draft of the 2019 Instructions For Form W-4 is 11 pages – E-L-E-V-E-N P-A-G-E-S – long and has been substantially updated to “comply” with the hastily enacted TCJA (Tax Cut & Jobs Act)."
Here are more links about the new W-4,
https://www.bing.com/search?q=new+w...&sc=8-7&cvid=00ec0d05719f4aa895f131811dd56242
The New Draft Version 2019 IRS Form W-4 Is A Rage Inducing Abomination
Written by John Dundon | Posted in Draft Version 2019 IRS W-4
https://www.taxconnections.com/taxb...-is-a-rage-inducing-abomination/#.XK32uPlKhPZ
"The new ... W-4 relies on other non-wage income, deductions and tax credits as opposed to simple allowances like the good old days – you are now forced to share with your employer things that your employer may have previously not known about you or worse still…things that you may not want your employer to know about you! ..."
"The draft of the 2019 Instructions For Form W-4 is 11 pages – E-L-E-V-E-N P-A-G-E-S – long and has been substantially updated to “comply” with the hastily enacted TCJA (Tax Cut & Jobs Act)."
Here are more links about the new W-4,
https://www.bing.com/search?q=new+w...&sc=8-7&cvid=00ec0d05719f4aa895f131811dd56242
https://www.narfe.org/pdf/StateTaxRoundup.pdf NARFE has their new state tax roundup available to download on their site.
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