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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22773
Experience:  Taxes, Immigration, Labor Relations
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Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

HiCustomer Thank you for asking your question on JustAnswer.

I would be glad to help you, but to estimate your tax liability from distribution of the inherited IRA I need to know

- the amount of distribution

- your other taxable income

- your filing status

- number of dependents, deductions and credits -

Thank you again for trusting us with your problem. Please reply as soon as possible so that we can finish answering your question.

Customer: replied 5 years ago.
My portion of the IRA is 249,333. Other taxable income - hubby grosses 30K a year. I have been unemployed since Sept. but my base was $45K + commissions of about $25,000 up until I was laid off. Filing status is married, no dependents, other deductions/credits appx. 1,630 in Doctor and prescriptions (probably more)
Expert:  Lev replied 5 years ago.

Assuming

- your income $25,000

- and your spouse's income $30,000

Total - $55,000

- standard deductions $10900

- personal exemptions for two persons - $7000

Taxable income - $37100

Your tax liability would be $4,163 - your actual tax due or refund depends on your withholding.

 

Additional income $249,333 will push you into higher tax bracket..

Your taxable income would be - $286,433

Your tax liability would be $73,652

So additional tax liability because of distribution - $69,489

Let me know if you need clarification of any corrections are needed in assumptions above...

 

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22773
Experience: Taxes, Immigration, Labor Relations
Lev and 6 other Tax Specialists are ready to help you
Customer: replied 5 years ago.
So, my taxable income on the IRA will be 143,141?
Customer: replied 5 years ago.
So, will my taxable income on the IRA be $143,141?
Expert:  Lev replied 5 years ago.

Your taxable income is calculated as (Adjusted Gross income) - (standard deductions $10900) - (personal exemptions for two persons $7000)

Your taxable income without IRA distribution is $37100

 

My assumption is - that all IRA distribution is taxable - so your total taxable income would be $37100 + $249,333 = $286,433

If contribution to the IRA were may on pre-tax basis - all distribution - $249,333 - would be taxable.

I am not sure where you get this amount $143,141?

 

If any contributions to the IRA were on after-tax basis - such contribution would constitute the basis - and in case of distribution - taxable amount would be = (distributed amount) - (basis)

 

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22773
Experience: Taxes, Immigration, Labor Relations
Lev and 6 other Tax Specialists are ready to help you
Customer: replied 5 years ago.

Sorry to be confused however, what is the tax on the IRA? Again my portion is $249,333

What is the amount or percentage I would pay on cashing it all in?

Expert:  Lev replied 5 years ago.

There is no any specific tax rate for the IRA distribution...

That tax amount depends on your total taxable income, filing status, deductions, etc

In your situation - taxable income

-- between $16,050 and $65,100 is taxed at 15%

-- between $65,100 and $131,450 is taxed at 25%

-- between $131,450 and $200,300 is taxed at 28%

-- above $200,300 - is taxed at 33% rate

 

Based on information your provided - your tax liability

without distribution is estimated as $4,163

with $249,333 taxable distribution - $73,652

 

So - your additional tax liability because of distribution would be $73,652 - $4,163 = $69,489 - it is about 27.8%

 

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