Have a Tax Question? Ask a Tax Expert
Hi and welcome to Just Answer!If you are a nonresident alien - you will be taxed only on income from US sources.The distribution from your 401k will be considered as from US sources. To avoid large taxable income - you may spread distributions over several years.Another option - to transfer distributions into IRA account - and use it as tax deferred investment account.If you decide to take a distribution and you are below 59 1/2 - generally it will be a subject of additional 10% penalty. The following six exceptions apply to distributions from any qualified retirement plan:
The following additional exceptions apply only to distributions from a qualified retirement plan other than an IRA:
r u there
Yes - I am here. Please feel free to ask if you need any help.
i am 31 yrs, old..
is there any way i can avoid a penalty..
i have medical bills in india and thailand where i stay and travel between.
Only exceptions are available that I listed above. You need to verify if any may be used in your situation.
do you know the process.
of avoiding penalty..
do i need to fill a form..
is there a form.
i am trying to optimize 2 parameters - on one hand early withdrawal and lumpsum..will be high on tax..but on other hand..
i will get a good exchange rate and since fixed deposit rates are 10% in indian banks..
so i need to understand..
if i withdraw..
The 10% additional tax is reported on the appropriate line of Form 1040 . You must also file Form 5329 , Additional Taxes on Qualified Plans (Including IRA's) and other Tax-Favored Accounts.If you claim an exception - Enter the appropriate exception number on line 2.
48500 usd now, what is my tax ?
For exception codes - see instructions - page 3 - http://www.irs.gov/pub/irs-pdf/i5329.pdf
what if i withdraw..
I need a simulation
Yr/Withdrawal/Assume 10% penalty/Tax
what are my exemptions
tax credits if any..
what is tax rate and variable.
If you take a full distribution $48,000 - and file joint tax return as married filing jointly, and you are nonresident aliens - your estimated income tax liability would be $5340 plus 10% penalty of no exception could be used.
Tax rate is based on your total taxable income - see last page in this publication - www.irs.gov/pub/irs-pdf/i1040tt.pdf
i am seeing 6366 usd..
in your file.
As nonresident aliens - you will be able only claim personal exemption $7300. You may not claim dependents who are neither US citizens nor residents of the US.
also, i have heard non residents have fixed tax rate
Tax rates for residents and nonresidents are same - and based on total taxable income.You will file tax return 1040-NR - www.irs.gov/pub/irs-pdf/f1040nr.pdf and calculate your tax liability.
my daughter is usa citizen
can i claim her as dependent.
she lives in india.
Yes - you may claim your US citizen daugher as a dependent.
from what i understand..
we withdrew 5000 usd from my wife's ira account..
she can file separately and pay no tax.
kindly confirm if correct?
That is not correct.
then i can file with my daughter as dependent.
then will i be filing jointly..
You may not file separately and joitly in the same tax year.
ok, so for 2011, when i file next year..
what will i be doing..
If you file a joint return with one dependent - you may take distribution tax free up to $11,000, but still may be liable for 10% penalty.
what is distribution tax ..
you mean 401k distribution..
yes distribution from 401k account.
so, assume i have two scenarios for simplicity..
second - 5000 usd from wife + 21000 usd from 401k in 2011, 27500 usd from 401k withdrawn on jan 1 2012
first - 5000 usd from wife + 48500 usd from 401k in 2011
what will be my tax & exemption, taxable amount...
it is getting late for me. can u pls post your answer here, along with how you calculated tax amount.
i will read tomorrow.
you can take the whole day to answer..
If you will take distributions 5000 usd from wife + 48500 usd from 401k in 2011I am working on calculations - please stay with me...
it is 1 am in morning here
If you will take distributions 5000 usd from wife + 48500 usd from 401k in 2011if you file joint tax return with your spouse as nonresidents with one dependent.your estimated income tax liability would be $5545 plus 10% penalty if applicable.
Please be aware that is very raw estimate - when you file your tax return - you might itemize and get this amount a little lower.
but let me know on how you got to 5545$
5000+48500-$11000(personal exemption) - then go to tax tables.
I am using tax software for estimations.
i will surely accept your response on saturday..
pls post your response..
you have been great help
i need to rest
Please post any clarification questions you have.
partly in 2011 and 2012..
pls let me know scenario 2..partly in 2011 and 2012..
and how u calculated tax amount..
it would be great help..
if you can post..
tax software simulation file..
like the draft 1040 nr..
for both scenarios..
approx. is ok..
If we leave 10% penalty as a separate issue.You will be able to distribute income tax free up to $11,000 per year without income tax liability.The amount above will be taxed as a regular income based on tax tables which may be found in this publication - www.irs.gov/pub/irs-pdf/i1040tt.pdfI am using this tax calculator - http://hrblock.com/free-tax-tips-calculators/tax-estimator.html?fil_st=&wages=&tpage= - but there are many others available online.
I am not able to provide the draft of 1040-NR because it will take more time considering the price offered.If your total distribution 5000+48500=53500 will be equally spread over two years - providing gross income $26750 each year - your estimated income tax liability for each year would be $1580.For calculations - $26750 - deduct $11,000 personal exemptions - and determine tax liability using tax tables.