Does anyone know how sub payments will effect taxes? Thank you
9 replies (most recent on top)
If you had taxable income reduced by 401k contributions while working, when those contributions stop, you may have more taxable income. 401k max was around 25k so the impact could be significant. Don’t panic, just be prepared.
You and the bank will no longer be making any 401k contributions. You will be free to move your 401k account to another manager, should you wish to do so.
Ex employee who receiving SUB paymants, are you still eligible for 401K contributions?
All that is wrong with the internet. Here we a focused question for genuine help and the first two nimrods to answer give completely wrong information. First a misguided Turbo Tax tool winging it by guessing at forms and supplying completely irrelevant 401K information at no charge. Bad enough but the next dude ups the ante by guessing at withholdings with the voice of authority.
Folks, it’s ok to not answer, read and learn something
Hopefully the OP circled back to read the correct answers and hasn’t been harmed by these fools.
Exactly right - They DO withhold Federal and state. I had HR tell me they don't withhold anything on the day I was laid off but she was dead wrong. You'll get the breakdown of all the taxes withheld from each paycheck in the mail usually on the same day you get paid.
I have to say that answer is completely wrong. They withhold all federal/state taxes as before. It is FICA (social security) that does not get withheld
Thank you!
If you receive Sub Pay the Bank is no longer required to hold out & pay State or Federal taxes on the income you are receiving so you will have to pay all of the Federal / SS / State taxes yourself come income tax filing time.
It will depend on what forms report sub and unemployment income. Tax programs should be able to handle that, and you could run the estimated numbers to see the tax result. Or just consult a tax preparer.
Keep in mind, you might night have as much 401K to reduce your taxable income. That could be a big problem, since max 401K is about $25,000 vs. IRA about $7000.