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Brenda Guy
Brenda Guy, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 151
Experience:  20 years of working with income and estate tax issues for families and businesses.
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I had to cash in my 401k. Now my income for 2010 will be highly

Resolved Question:

I had to cash in my 401k ($200k) to pay off debt. Now my income for 2010 will be highly elevated and I will be paying a ton in taxes. Before the end of December rolls around, is there something I can do to pay less taxes?
Submitted: 3 years ago.
Category: Tax
Expert:  Brenda Guy replied 3 years ago.

Brenda Guy :

Unfortunately, there is not much that can be done to the magnitude. Did they withhold anything at all from the distribution?

Brenda Guy :

You can do the regular year end tax planning things. However, they all involve spending money.

Brenda Guy :

If you are still working get back into the 401(k) with the maximum contribution through the end of the year. Clean out your closets and donate to charity.

Brenda Guy :

Are you over 591/2? If not there will be a 10% penalty on top of the tax.

Brenda Guy :

Do you have any assets you can sell?

Brenda Guy :

Can you borrow against your home?

Customer:

WE have upped our donations and we placed $75k of the balance in a liquid account. 42 years old.

Expert:  Brenda Guy replied 3 years ago.
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Expert:  Brenda Guy replied 3 years ago.

I am glad to see you set some money aside to pay taxes.

 

Customer: replied 3 years ago.

I just didn't know if a property purchase or something of that nature would reduce my taxes.

 

Expert:  Brenda Guy replied 3 years ago.
No, a property purchase will not reduce your taxes. When you purchase property the cost is capitalized until you sell it or in the case of a rental depreciated over 271/2 years.
Customer: replied 3 years ago.
Gotcha..... Thank you for the answers. I just didn't want something to slip by, if I could make a difference prior to Dec 31. Wish Obama was giving some sort of break for people in this economy that need to access their 401k to survive.
Expert:  Brenda Guy replied 3 years ago.
I echo your wish. It would be nice if people could really get help.
Brenda Guy, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 151
Experience: 20 years of working with income and estate tax issues for families and businesses.
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