Welcome to Just Answer! Thank you for allowing me to answer your question. I am sorry to hear about your situation. I will do my best to help you!
First of all, if your income will be about $200,000, using the standard deduction
of $6,100 for 2013 and the personal exemption of $3,900, your taxable income will be $190,000. As a single taxpayer, this puts you in the 33% tax bracket. The 2013 income tax
on this amount is about $47K, using the 2013 tax tables. You are JUST inside the 33% bracket, by less than $10k! If you drop your income below about $185k, you will only be in the 28% bracket.
However, as you are under age 59 1/2, and also under age 55 when you seperated from employment, any withdrawals from your retirement plan will also be subject to a 10% excise tax under IRC §72(t). This boosts the Federal tax by $10k to about $57k.
For California, you will be in the 9.3% tax bracket, so you will pay about $16k in income tax. Now, depending on when you pay the CA tax, you may be able to drop your Federal income tax bill a bit. If you pay the CA tax before December 31, you can take this as an itemized deduction, and it will drop your Federal liability by about $2.5k +/-.
If you take out smaller amounts to make the monthly payments on your debt, you will be better off, I believe! If the $200k figure includes $100k of retirement withdrawals, then without them you only have $100k of income. Then, you would only take out what you need, smaller amounts (the cumulative during the year being less than $90k), you would the only be in the 25% bracket for Federal (still 9.3% for CA). You would still be subject to the 10% excise tax on any amount you took out.
Have you tried talking to the credit card companies? It is such a waste to spend so much unnecessary tax! Often they will take settlements from unemployed individuals who have fallen on hard times or lost jobs. I had a recent client who setteled for literally $0.10 on the dollar! He paid 1/10 of the bill. It hits your credit report, and the forgiveness of debt is also taxable income, but it has no 10% penalty! And the hit to your credit report, depending on your spending habits and credit usage, might be negligable.
I sincerely XXXXX XXXXX good luck with your situation! This economy has been hard on all of us!
I hope that I have answered your questions. If I have, please rate me positively. I would appreciate that! Again, thanks!