Do I still get taxed?

Question

My credit union takes out $300 a month directly to my saving account before tax. Would I get taxed when I do my taxes? Is it really a better way to save?

Answer 1

Yes, of course it's included in your taxable income. The reason it's a good way to save is that it's saved before you ever see it so you're less likely to spend it instead.

Answer 2

It depends on the kind of account your union puts the money into. Ask your union if the money they put in savings each month is tax-deferred or taxable.

They should be able to tell you without any problem.

If the money is taxable, then you must claim it as income when you file your taxes and pay income tax on it.
If the money is tax-deferred, you will pay taxes on it someday, but not now.

The best kind of savings is tax-deferred (like an IRA).

Answer 3

Yes, of course you are taxes on those funds, unless they are specifically directed to a tax-exempt 401K or similar. If not, what is happening here is that your employer is providing a convenience for you in depositing that money directly for you. It is actually no different than you receiving the money from your employer, and then depositing it via your own check to your savings account.

Answer 4

It depends on which account it goes into. If it's pretaxed or not, such as a 401K. If it's a regular savings you will get taxed and are not earning what you can elsewhere.