Bank account question

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JIMX7
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Bank account question

Post by JIMX7 »

If we are both retired with only social security income and have $400,000
In already taxed saving account are our withdrawals considered income ?
jebmke
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Re: Bank account question

Post by jebmke »

Not for tax purposes. Any interest earned in the account would be considered income for tax purposes but likely not subject to tax given that you have no other income other than Social Security.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
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JoMoney
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Re: Bank account question

Post by JoMoney »

JIMX7 wrote: Mon Jan 17, 2022 10:54 am If we are both retired with only social security income and have $400,000
In already taxed saving account are our withdrawals considered income ?
For what purpose?
If you already paid taxes on that saved money, moving it from one account to another wouldn't be considered taxable income.
Some people might make periodic withdrawals of their (already taxed) savings, and for purposes of qualifying for a credit card or rent might call their periodic withdrawal amounts "income" as a way to show the spending "income" available to them each period.
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dbr
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Re: Bank account question

Post by dbr »

If you are budgeting for annual expenses and you withdraw money from that account and spend it, then that money is income relative to your budget.

What is the reason for asking if it is income?
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JIMX7
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Re: Bank account question

Post by JIMX7 »

Was asking for tax purposes.
If we had a combined income from SS
Like at $35,000 but added $25,000 from savings would our taxable income be $35,000 or $60,000 ?
dbr
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Re: Bank account question

Post by dbr »

JIMX7 wrote: Mon Jan 17, 2022 12:08 pm Was asking for tax purposes.
If we had a combined income from SS
Like at $35,000 but added $25,000 from savings would our taxable income be $35,000 or $60,000 ?
Withdrawal from an ordinary savings account is not a taxable transaction. Withdrawing from a tax deferred account such as an IRA is a taxable transaction and so is selling an asset at a profit.
mptfan
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Re: Bank account question

Post by mptfan »

JIMX7 wrote: Mon Jan 17, 2022 12:08 pm Was asking for tax purposes.
If we had a combined income from SS
Like at $35,000 but added $25,000 from savings would our taxable income be $35,000 or $60,000 ?
That depends on how the money was "added" from savings. There are different ways to receive money from your savings account... you can simply transfer money from your savings account, or you can get interest payments, or in the case of bonds or bond funds you can get divident payments, or in the case of stocks or stock funds you can also get dividends.

If you are simply transferring money from your savings account, that is not considered income for tax purposes because that money has already been taxed, but any interest or dividend payments is taxable income.

The rules for tax deferred accounts are different.
Last edited by mptfan on Mon Jan 17, 2022 12:27 pm, edited 1 time in total.
delamer
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Re: Bank account question

Post by delamer »

If the money is being withdraw from a standard bank/credit union savings account, then there will be no tax due.

So your gross income will not change, nor will your taxable income.

(Your gross Social Security income is not the same as your taxable income. So $35,000 gross is not equal to taxable.)
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JIMX7
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Re: Bank account question

Post by JIMX7 »

So as we live in FL at $35,000 in SS our Federal tax rate on that would be
50% on that amount would be taxed.
And if we withdrawal $25,000 from our savings to put in our checking that would be considered a non taxable event ?
Thanks
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samsoes
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Re: Bank account question

Post by samsoes »

Withdrawing from a savings account is NOT a taxable event. Period.
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MrJedi
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Re: Bank account question

Post by MrJedi »

JIMX7 wrote: Mon Jan 17, 2022 12:40 pm So as we live in FL at $35,000 in SS our Federal tax rate on that would be
50% on that amount would be taxed.
And if we withdrawal $25,000 from our savings to put in our checking that would be considered a non taxable event ?
Thanks
Non taxable. It should have already been subject to tax before it entered the savings account. Interest from the savings account is taxable though, regardless if is withdrawn or not.
Last edited by MrJedi on Mon Jan 17, 2022 1:31 pm, edited 1 time in total.
Invest4lt
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Re: Bank account question

Post by Invest4lt »

samsoes wrote: Mon Jan 17, 2022 12:43 pm Withdrawing from a savings account is NOT a taxable event. Period.
This
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dbr
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Re: Bank account question

Post by dbr »

It is possible to open an IRA savings account. It does not seem that is the case here. A person would presumably know if it were.

Possible confusion could come from the idea of paying tax on gains when things are sold, but not for a savings account.
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JIMX7
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Re: Bank account question

Post by JIMX7 »

I know right.
We are starting to deposit qualifying dividends and interest in a separate banking account. We want to live on a savings withdraw only. I am way over in my equities to bond ratio for my age
but I can sleep at night and fish at day
Thanks for all the replies and tight lines.
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