Welcome Guest! To enable all features please Login or Register.

Notification

Icon
Error

Federal Retirees


For those approaching retirement as well as the currently already retired, here is a forum to share ideas and thoughts and exchange questions and answers.


To read today's top news stories on federal employee pay, benefits, retirement, job rights and other workplace issues visit FederalDaily.com.

To maximize your retirement, we also suggest you read "Retired Federal Employees Almanac".


(Reminder: soliciting of services is not allowed on this site.)

5 Pages«<2345>
Options
Go to last post Go to first unread
osama  
#61 Posted : Saturday, June 8, 2013 11:20:50 AM(UTC)
SESIQ70

Rank: Senior Member

Groups: Registered
Joined: 4/22/2013(UTC)
Posts: 323

Thanks: 1 times
Maryland is a progressive state and taxes accordingly. You should be happy to stay and pay your fair share
Jim Hanrahan  
#62 Posted : Saturday, June 8, 2013 9:24:56 PM(UTC)
EngineerJim

Rank: Senior Member

Groups: Registered
Joined: 2/17/2013(UTC)
Posts: 471
Man
United States
Location: USA

Thanks: 1 times
Was thanked: 22 time(s) in 20 post(s)
Skippy1134 wrote:
Maryland raised the tax rate on couples making over $150k from 4.75% to 5.0% last year.
.
.
Also normally not recognized in the various tax comparisons are the county taxes assessed in Maryland. In my county that is another 3.2% on top of state taxes.
.
.
So ignoring deductions, leaving Maryland for NC would lower my income tax from rate about 7.95% to zero. Plus lower property taxes, insurance rates, etc.
Maryland taxes are another story, but since it was brought up...
The top MD state income tax rate is 5.75%, plus the county income tax up to 3.2% makes that bracket 8.95% !!!

The MD state income tax rate on single filers was raised from 4.75% to 5.00% for income over $100,000.
Plus my county charges 3.0% income tax.
My TAXABLE income is under $100,000, so I am in the MD 7.5% bracket.
Jim Hanrahan  
#63 Posted : Monday, June 10, 2013 10:53:00 PM(UTC)
EngineerJim

Rank: Senior Member

Groups: Registered
Joined: 2/17/2013(UTC)
Posts: 471
Man
United States
Location: USA

Thanks: 1 times
Was thanked: 22 time(s) in 20 post(s)
EngineerJim wrote:
The NC House tentatively approved bill H998 on Friday in a 72-32 vote.
The final House vote is expected Monday.
The NC House passed bill H998 on Monday (6/10). The bill was sent to the NC Senate for their cut, starting in the Committee on Finance. We will see what changes they make...
Lynne Lawrence  
#64 Posted : Wednesday, June 12, 2013 8:05:58 PM(UTC)
italy4me

Rank: Rookie

Groups: Registered
Joined: 5/31/2011(UTC)
Posts: 35

I have been looking at property in NC for two years in Leland NC. Absolutely beautiful area. I retired in January of this year and am still waiting on the finalization of my claim. Thanks very much for sharing this information on the bill for taxing annuities. Makes that pot just a little bit sweeter
Jim Hanrahan  
#65 Posted : Thursday, June 13, 2013 12:08:44 AM(UTC)
EngineerJim

Rank: Senior Member

Groups: Registered
Joined: 2/17/2013(UTC)
Posts: 471
Man
United States
Location: USA

Thanks: 1 times
Was thanked: 22 time(s) in 20 post(s)
EngineerJim wrote:
EngineerJim wrote:
The NC House tentatively approved bill H998 on Friday in a 72-32 vote.
The final House vote is expected Monday.
The NC House passed bill H998 on Monday (6/10). The bill was sent to the NC Senate for their cut, starting in the Committee on Finance. We will see what changes they make...
The NC Senate Finance Committee issued a substitute for H998.
Link to Bill H998v4
It specifically retains the Bailey exemption for federal retirement plans vested in the mid 1980's. It changed the personal income tax rate from the House version of 5.9% to 5.4% ;(2012 7.75%), and increased the standard deduction (exemption) from the House version of $12,000(married)/$6,000(single) to $15,000(married)/$7,500(single). Both eliminate the 2012 personal exemption (per person) to allow the larger standard deduction.

I don't see any mention of mortgage interest or property tax deductions against the income tax. So, I don't think those deductions will be allowed under this bill since that section is repealed, "The following statutes are repealed: G.S. 105-134.6"

This Senate version only has a few increases in the items subject to sales tax, similar (but not exactly the same) as the House version. This is a big change from the large number of items subject in the other Senate bills.
TotallyRetired  
#66 Posted : Thursday, June 13, 2013 9:28:33 AM(UTC)

Rank: Senior Member

Groups: Registered
Joined: 2/21/2013(UTC)
Posts: 1,577

Was thanked: 3 time(s) in 3 post(s)
It sounds like NC is trying to simplify its tax laws.   

If mortgage interest & property tax are not deductible, then most residents would be able to do a short form and take the standard deduction.

As discussed a while back, the loss of the interest & property tax deduction would be a non-issue for many federal retirees.
Lynne Lawrence  
#67 Posted : Friday, June 14, 2013 2:36:10 AM(UTC)
italy4me

Rank: Rookie

Groups: Registered
Joined: 5/31/2011(UTC)
Posts: 35

You don't need tomworry about the real estate taxes in NC but depending on where you live your homeowners insurance can be a little high. I live in Lexington KY and have a home valued between 250 and 300K and pay about 3K in property tax per year and homeowners ins runs just under 1, 000. In Brunwick County NC the insurance is higher than the property taxes...........but overall is a wash
Lynne Lawrence  
#68 Posted : Friday, June 14, 2013 2:42:36 AM(UTC)
italy4me

Rank: Rookie

Groups: Registered
Joined: 5/31/2011(UTC)
Posts: 35

How does change apply if you have rolled your TSP over into a regular IRA? I contri uted to TSP from the day it was offered and am CSRS with no match
Jim Hanrahan  
#69 Posted : Friday, June 14, 2013 4:09:22 AM(UTC)
EngineerJim

Rank: Senior Member

Groups: Registered
Joined: 2/17/2013(UTC)
Posts: 471
Man
United States
Location: USA

Thanks: 1 times
Was thanked: 22 time(s) in 20 post(s)
italy4me wrote:
How does change apply if you have rolled your TSP over into a regular IRA? I contributed to TSP from the day it was offered and am CSRS with no match
I believe when you roll over the TSP to a regular IRA it losses its identity as a federal retirement benefit. Therefore it will be treated like a regular IRA for tax purposes (ie federally taxable on withdrawl).

In the NC Bailey decision, if you contributed before Aug 12, 1989, the TSP withdrawls would have been free from NC state income tax (section 105-134.6(b)(5b). I don't see any NC deduction/exemption for IRA withdrawls in the proposed tax reform. In 2012 NC allowed a $4,000 exemption for such retirement plans (section 105-134.6(b)(6).

Remember, if your CSRS service started before 1984, your pension is not taxed in NC in accordance with the Bailey Decision. And you get a large standard deduction which will reduce or eliminate the taxable amount of your IRA withdrawls.EngineerJim2013-06-14 12:24:26
Lynne Lawrence  
#70 Posted : Friday, June 14, 2013 4:42:37 AM(UTC)
italy4me

Rank: Rookie

Groups: Registered
Joined: 5/31/2011(UTC)
Posts: 35

Good point! KY is trying to do away with the current 40K exemption from state taxes for federal retirees.......
TotallyRetired  
#71 Posted : Friday, June 14, 2013 4:10:40 PM(UTC)

Rank: Senior Member

Groups: Registered
Joined: 2/21/2013(UTC)
Posts: 1,577

Was thanked: 3 time(s) in 3 post(s)
EngineerJim wrote:
...you get a large standard deduction which will reduce or eliminate the taxable amount of your IRA withdrawals.


It sounds like a married couple will be able to shelter monthly withdrawals from IRAs that contain qualifying TSP money.

It seems that one option for a simple retiree budget would be to set up automatic IRA withdrawals of $1,000 per month & have it sent directly to the mortgage company.

This would pay off the mortgage with money that is taxed at only the federal level. Federal withholding could be accomplished through the pension.
Semi-Retired2013-06-15 03:01:16
Lynne Lawrence  
#72 Posted : Friday, June 14, 2013 8:36:15 PM(UTC)
italy4me

Rank: Rookie

Groups: Registered
Joined: 5/31/2011(UTC)
Posts: 35

Are you saying that if I have rolled my thrift over into a qualifying IRA it would still be sheltered from NC state income tax? If so, where do I find if my IRA qualifies?
TotallyRetired  
#73 Posted : Friday, June 14, 2013 9:16:12 PM(UTC)

Rank: Senior Member

Groups: Registered
Joined: 2/21/2013(UTC)
Posts: 1,577

Was thanked: 3 time(s) in 3 post(s)
My interpretation of the last sentence of Jim's recent post (see below) is that:

A TSP that was directly rolled over into an IRA would not be subject to NC tax if the annual withdrawal is equal to or less than the standard deduction.

I don't have a specific cite. Jim, If I have misinterpreted what you said, feel free to jump in here. You won't hurt my feelings, as I am not a tax expert.


EngineerJim wrote:
italy4me wrote:
How does change apply if you have rolled your TSP over into a regular IRA? I contributed to TSP from the day it was offered and am CSRS with no match
I believe when you roll over the TSP to a regular IRA it losses its identity as a federal retirement benefit. Therefore it will be treated like a regular IRA for tax purposes (ie federally taxable on withdrawl).

In the NC Bailey decision, if you contributed before Aug 12, 1989, the TSP withdrawls would have been free from NC state income tax (section 105-134.6(b)(5b). I don't see any NC deduction/exemption for IRA withdrawls in the proposed tax reform. In 2012 NC allowed a $4,000 exemption for such retirement plans (section 105-134.6(b)(6).

Remember, if your CSRS service started before 1984, your pension is not taxed in NC in accordance with the Bailey Decision. And you get a large standard deduction which will reduce or eliminate the taxable amount of your IRA withdrawls.
Semi-Retired2013-06-15 05:23:24
Lynne Lawrence  
#74 Posted : Friday, June 14, 2013 9:33:13 PM(UTC)
italy4me

Rank: Rookie

Groups: Registered
Joined: 5/31/2011(UTC)
Posts: 35

Do any of you have a tax expert in NC that I can contact? Thanks very much
Jim Hanrahan  
#75 Posted : Friday, June 14, 2013 9:49:18 PM(UTC)
EngineerJim

Rank: Senior Member

Groups: Registered
Joined: 2/17/2013(UTC)
Posts: 471
Man
United States
Location: USA

Thanks: 1 times
Was thanked: 22 time(s) in 20 post(s)
Semi-Retired wrote:
My interpretation of the last sentence of Jim's recent post (see below) is that:

A TSP that was directly rolled over into an IRA would not be subject to NC tax if the annual withdrawal is equal to or less than the standard deduction.
I am not a tax expert, but for what it is worth, my 2-cents...

Once in a regular IRA, it doesn't matter where the money came from.
Under the proposed NC state income tax regulations the IRA withdrawls are treated as taxable income. If the total taxable income is less than the standard deduction (or your state itemized deductions) then no tax is due. So you have to add up all your taxable income. Remember those vested according the Bailey decision have pension income that is NOT taxable. For example:

$60,000 CSRS pension (not taxable)
$11,000 IRA withdrawls (taxable)
$ 2,000 Interest, dividends, etc. (taxable)
-------
$13,000 taxable income
-12,000 standard deduction (married filing jointly) from one proposal
-------
$ 1,000 taxed at 5.9% = $59. tax owed that year.

--- or ----
$13,000 taxable income
-15,000 standard deduction (married filing jointly) from other proposal
-------
$ 0 taxed at 5.4% = $0 tax owed
Skippy1134  
#76 Posted : Friday, June 14, 2013 10:15:39 PM(UTC)

Rank: Senior Member

Groups: Registered
Joined: 3/28/2013(UTC)
Posts: 284

Semi-Retired wrote:
I don't have a specific cite. Jim, If I have misinterpreted what you said, feel free to jump in here. You won't hurt my feelings, as I am not a tax expert.


This very informative thread has grown, so here is the cite from the first page! http://www.dornc.com/taxes/individual/benefits.html

"..qualifying tax-exempt Bailey benefits rolled over into another retirement plan lose their character and would not be exempt upon distribution from the other plan unless the plan is a qualifying Bailey retirement account in which the employee was vested as of August 12, 1989. (Rollovers to IRAs will always result in a loss of tax-exempt status since IRAs do not qualify under the Bailey settlement.)"

I suppose this might change with the recent legislative action.
Skippy1134  
#77 Posted : Friday, June 14, 2013 10:22:08 PM(UTC)

Rank: Senior Member

Groups: Registered
Joined: 3/28/2013(UTC)
Posts: 284

I'll have to ask my accountant, she's out shopping right now!! But I think our total property tax and insurance on our second row beach place is about $4500 per year. That includes flood and wind coverage.

House is probably valued at something over $500k but tough to determine because the market has been so bad there....which is why we were able to buy a place. It is all sort of relative since, coming from Maryland, all of those costs seem low to us. Skippy11342013-06-15 07:16:04
Lynne Lawrence  
#78 Posted : Monday, June 24, 2013 8:03:11 PM(UTC)
italy4me

Rank: Rookie

Groups: Registered
Joined: 5/31/2011(UTC)
Posts: 35

Are there any new developments on NC tax reform? Any up to datewebsites to see what is happening?
Jim Hanrahan  
#79 Posted : Friday, June 28, 2013 10:19:40 PM(UTC)
EngineerJim

Rank: Senior Member

Groups: Registered
Joined: 2/17/2013(UTC)
Posts: 471
Man
United States
Location: USA

Thanks: 1 times
Was thanked: 22 time(s) in 20 post(s)
Has anyone found anything?
All I have found searching the web is that the state legislators are working behind closed doors trying to hammer out a "consensus bill" between what the house passed and what the senate passed.

WRAL.com seems to cover this daily.
Link WRAL.com
Quote:
Senate puts tax reform back on the radar
The Senate Finance Committee put out a notice Friday that they would meet Monday at 2 p.m. and take up House Bill 998, the tax reform bill. After tentatively approving their version of tax reform earlier this month, senators pulled the bill back from consideration so they could negotiate with House leaders.
EngineerJim2013-06-29 06:29:25
Lynne Lawrence  
#80 Posted : Saturday, June 29, 2013 12:07:44 AM(UTC)
italy4me

Rank: Rookie

Groups: Registered
Joined: 5/31/2011(UTC)
Posts: 35

Thanks for the update and I will also watch on the link you provided
Rss Feed  Atom Feed
Users browsing this topic
Guest (2)
5 Pages«<2345>
Forum Jump  
You cannot post new topics in this forum.
You cannot reply to topics in this forum.
You cannot delete your posts in this forum.
You cannot edit your posts in this forum.
You cannot create polls in this forum.
You cannot vote in polls in this forum.

Powered by YAF 2.1.1 | YAF © 2003-2021, Yet Another Forum.NET
This page was generated in 0.263 seconds.