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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.
- 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...
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)
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?
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%