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Merlo
Merlo, Accountant
Category: Tax
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Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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My name is XXXXX XXXXX I am 72 years old. I have two IRA accounts,

Resolved Question:

My name is XXXXX XXXXX I am 72 years old. I have two IRA accounts, one which is doing OK and a second, smaller one which I would like to close in order to pay off some debts and for other expenses. I would like to withdraw $35,000 from that account this year and the balance of $27,000 in January, 2010. I am concerned that this would put me in a higher tax bracket, and I want to know how much I could withdraw without having that happen.

This year my total income was $68,550 and my itemized deductions were $14,696. After the $3,500 allowance for a single person,my taxable income was $50,354.The tax on that was $8608. The federal tax that was withheld from my social security and pension was $8325, and I owed and paid $258.

My account wants me to leave this money untouched, but I prefer to pay down debt and so want advice on how much I can safely withdraw without going into a new tax bracket.I'm a retired social worker living on a tight budget.

Thank you!
Submitted: 4 years ago.
Category: Tax
Expert:  Merlo replied 4 years ago.
Hello jackie,

Can you please tell me how much of your annual income is from social security?

Customer: replied 4 years ago.
yes. Hold on please. Net benefits paid in 2008 was $21,964.80. The balance was from pension. I have stocks and bonds, but just a loss in 2208.
Expert:  Merlo replied 4 years ago.
Hello again jackie,

Thank you for the additional information.

Assuming that your income and your deductions will stay around the same as they were last year, this means that your top tax bracket will remain at 25%. Whatever you withdraw from your IRA account you will have to figure as being taxed in that top bracket, as this is just extra income that will be added on to the top of the other income you already have for the year.

For the 2009 tax year, if once again you end up with regular taxable income of $50,354, this will mean that you can have up to an additional $31,896 in income and still remain in the 25% tax bracket. So any IRA withdrawal you take up to the amount of $31,896 would be taxed at the rate of 25% for federal tax. If you exceed that amount and withdraw additional money, the additional money then falls in to the next highest bracket of 28%.

Also, you will need to pay NY state tax on your IRA withdrawal, and that will be at the rate of 6.85% on any withdrawal that you make from the IRA account.

If this was helpful please press the Accept button. Positive feedback is also greatly appreciated.

Thank you jackie and let me know if you have more questions.


Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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