But all these accounts and funds were transferred to her as her sole property as part of our separation? Is it still my income? If we still file "married filing jointly" (which we have a chance to do), does that help our situation any?
SO sorry to be the messenger Rick but on these retirement plans the taxable event is when they are distributed, when they come out of the shell, so to speak, of the IRA, 401(k) and in the case of THIS non-qualified plan, when it's distributed, as well.
The money was simply given to your wife after you distributed it. Gifts between husband are not taxed ... (and if you did so after the divorce, there's still a $5,250,000 exemption on gift taxes)
So, the 265,800 + 100,000 + 205000 are simply added to your already existing 450000 of income for the year ... so distributing them all in the same year means that you made 1,020,000 for the year.
AND I've just realized that the estimator didn't add the 10% on the IRA portion.
(I hate this part of the job, but hopefully having all the facts, will help you "see around some corners." )
But, irrespective of the fact above, the numbers look like:
Out of the $570,800 withdrawn from the plans, we need to pay: $204, 379 in Federal Taxes *plus* $92,769 in CA taxes; for a wonderful grand total $295,148, or 51.7%
Again, sorry, but if you distribute All three in the same year PLUS a salary of 450,000 you've underestimated ... NOW I used simply a standard deduction, IF you itemize that will reduce the taxable income some.
Is that right? How on earth could the taxes be so incredibly high?
Two things need to be pointed out:
(1) I'm estimating TOTAL taxes (including the 450,000) not just the tax on the distributions themselves
(2) These are all retirement plan contributions, which are taxed as ordinary income. The stock sales you mention were taxed at the lower capital gains rates.
Filing jointly will most definitely reduce the taxes, (higher standard deduction AND higher threshold for the brackets)Federal Tax:$315,324.50 State Tax:$89,471.63 Total Tax:$404,796.13
That's less that 40% effective
To make you fee better about the numbers, go to the bottom of this page and use the tax estimator:http://www.tax-brackets.org/californiataxtable