Treat money accrued from a pension exactly like income. A pension is taxable, just as your paycheck was.
Anticipate tax statements in the form of a 1099-R. This form will show the gross financial benefits received over the previous year alongside taxable income. It will also list any withholdings made from your pension by the federal government.
File taxes with a 1040 form. There will be a separate box for pension income as opposed to other varieties of income. This difference means that a 1040EZ cannot be used to file for income derived from a pension.
Gauge your age in anticipating tax rates. Those who receive pension benefits before the age of 59 1/2 can expect to be taxed at a rate 10 percent higher than the standard income tax rate.
Evaluate tax obligations in your state. Each state has different rules when it comes to taxing pensions. Some do not tax pensions at all, while others treat it like income, just as on the federal level.