Have a Tax Question? Ask a Tax Expert
I am married, filing jointly. Our combine taxable income for 2010 was about $32,000. Will that change what I have to pay on the IRA withdrawal?
Are you saying I can withdraw $50,000 before Dec. 31,2011, and then the other $50,000 on January 2012? If so, how much would I have to pay each year (more or less, of course).
If the $32,000 is taxable income after deductions (such as the standard deduction or itemized deductions, personal exemptions etc), then the additional tax will still be about $22,000. If you spread it over 2 years then the additional tax will be about $18,000 over the 2 years ($9,000 each year). These are rough numbers since I don't know how much your social security benefits are.
Many banks waive early redemption penalties on CDs for IRA owners over age 70 1/2. If your bank does then you could withdraw $50,000 this year and place the other funds in a money market balance within the IRA. In January you could withdraw the balance from the IRA. You will need to check with your IRA to see if they will waive any penalties.