How to Know About a Windfall Tax On Retirement Funds
The subject of windfall taxes on retirement funds crops up from time to time in Washington. So how do you tell if windfall taxes are just talk, or are they coming soon? Here's how you separate fact from fantasy about windfall taxes.
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Instructions
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Understand the basic premise of a windfall tax. A windfall tax is levied against a business, industry or individual as a supplemental tax on income that is above normal. From the point of view of the taxpayer this looks a lot like being punished for succeeding beyond expectations. This is not the intention of the tax, but unfortunately that is often the perception.
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Understand that retirement funds are already subject to various forms of windfall tax. The most famous of these is the additional ten percent over and above standard income tax the federal government siphons off of tax-exempt retirement funds when they are first distributed. The purpose of this extra tax is to encourage investors to leave retirement funds in the program rather than using the retirement plan as a tax-free funnel.
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Subscribe to a reputable source of financial news and information. Now that you know some of the basic facts about windfall taxes and how they already affect retirement funds, you will be able to follow news about this topic and understand the nuances of the windfall tax situation.
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Visit the IRS website for more information about taxes in general and windfall taxes in particular. The IRS frequently posts updates to tax law on its website.
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Find Internet sites that track legislation enacted by Congress. If a windfall tax on retirement funds is enacted, these sites will post information about the legislation.
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Tips & Warnings
If you are concerned about windfall taxes on retirement funds then do not hesitate to contact your state representatives and express your opinion on this subject. If you agree with the idea, say something. If you disagree with the idea, say something. Taxpayer's representation is what America was founded on.
