So do we all pay city tax twice? MY dad says yes?

So If I pay city tax on 100% of my income and I put 15% of my income into my TSP (like a 401k) WIll I have to pay city tax on it again when I withdraw it or just on the earnings and are my employers' contributions considered earnings?

My dad insists yes, but I don't know how that can be. Who would you pay it to anyway, where you worked before retirement? Where you love? Where the money is being invested?

WHat about city tax though.... IT come out of 100% of my income, no matter how much i use from my FSA or TSP.
Example:
I made 60K last year, put 9K into my TSP and 5K into a FSA (flexible spending account) and I paid $900 in city tax (a rate of 1.5%).

Will I have to pay CITY tax again.

Your dad is incorrect (sorry dad).

The money that goes into your 401K is not taxed now by federal, state, or city government (unless of course you are also adding post-tax contributions). But for now let's assume you are doing what most people do - contributing pre-tax dollars. At the end of the year, your W-2 will show TAXABLE earnings - the amount you earned LESS the $$$ put into the 401K.

You contribute 15% of your income into a 401K.
That 15% is not taxed now.
When you turn 59 1/2, you can begin to withdraw funds from the 401K. You will NOW pay tax on the money that isn't taxed today, plus any taxes on gains in the account.

If your employer matches a percentage (lets say dollar for dollar on the first 3%) then you are earning additional monies, that you will eventually have to pay tax on. But presumably when you get to retirement, you will have less earned income, and therefore your tax bracket will likely be lower than it probably is today.

It is the SMARTEST way to save for retirement. Your company will advise you what kinds of funds they offer (aggressive, fixed, international, etc) through their fund manager. You direct the money to the kinds of funds that are appropriate for your age and risk tolerance.

Good Luck

EDIT: You'll have to tell me what city. My brother lives in NYC, and is a USPS worker. He has never paid CITY tax on the amount that goes into his TSP (Thrift Savings Plan for those who are not familiar with the term, is a 401K for government agency employees.) I just spent time searching on the website http://www.tsp.gov/curinfo/qsas-limits.h... and couldnt find anything that would suggest that City tax is not part of the deduction. Maybe it something unique to where you live.

Some of us don't pay city taxes. I guess I should count my blessings.