Guest youngal32 Posted August 9, 2001 Posted August 9, 2001 I recently started a 401k account which showed up on my w-2 as deferred income, maybe box23? My question is how can my village where I live tax that income now, but they don't tax additional money I put into a defined contribution pension? When I retire how would I pay city tax and how would they be able to keep tract of the money and where it came from? Any help would be appreciated.:confused:
david rigby Posted August 9, 2001 Posted August 9, 2001 Sounds like different definitions of "taxable income" for different jurisdictions. I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
IRC401 Posted August 10, 2001 Posted August 10, 2001 If you are making contributions to a money purchase pension plan, the contributions are probably with after-tax money;so they would be treated differently than 401(k)contributions. In PA municipalities tax compensation, not other types on income, such as dividends,interest, or pensions. If you don't live in PA, your village may have a similar rule.
Guest GMedley Posted August 17, 2001 Posted August 17, 2001 When I lived in Philadelphia, the city taxed our full income, not reduced by 401(k) or IRA contributions. The state also taxed us on that full income. Later, I moved to Oklahoma, & converted my IRA to a Roth. Thus Oklahoma wanted to tax my IRA contributions, which had already been taxed by PA. This seemed unfair to me, & I filled out a form documenting that PA tax had already been applied to my IRA contributions, thus exempting it from OK tax. I believe this is legal (no one's busted me for it yet, at least). If you believe you will eventually be in this situation, it behooves you to keep good records of all this.
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