Have Tax Questions? Ask a Tax Expert for Answers ASAP
Hello and thanks for trusting me to help you today. I am a tax adviser with over 15 years of experience.The federal tax, state tax, and the 10% penalty are the normal amounts you would expect for this transaction. I am not sure exactly where you read the "other fees and taxes may be applicable" , but after making a financial hardship withdrawal, you cannot contribute to your TSP account for 6 months. So that would be seen as a penalty too because you lessen the growth in the TSP.Depending on the hardship reason you may be allowed to use Form 5329 and gain relief from the 10% penalty.
Exceptions could applied for the following situations:
The total withdrawal amount (before any taxes withheld) will be added to your income but you will be allowed the taxes withheld as a credit.
My goal is to give you excellent service but please reply below if you need more information prior to rating.
If I'm allowed to provide additional information, I have an annual income of @136,000. I had to withdraw $200,000 as I was out of work for 6 months this year (with no pay) dealing with serious medical issues, which included surgery. The money was for paying off bills and keeping me afloat while I was out without pay. I'm curious to know if setting aside $30,000 is sufficient to pay any fees/taxes that will be associated with the early withdrawal. Many, many thanks for your advise! Susan
One sec while I do some estimating
Do you file joint or single?
Do you have any dependents?
Do you know the medical costs you paid?
Actually, I was lucky and my insurance paid most. Out of pocket was less than $1,000.
The annual income ($136000) you stated, was that the amount you received in the year?
The income is my yearly salary, but I won't get all of that since I was on leave without pay for several months
Should I then cut that in half or what?
I need to know what you actually earned
Not by half, but probably 1/3
Ok one sec then please.........
I can check if you don't mind waiting a minute
If it matters, I claim myself at the end of the year...not during...
At that amount you would owe (estimated ) federal 78,000. Now I am guessing they withheld for you on the $200,000
That amount would need to be subtracted from your federal estimated tax liability.
Virginia tax rate I will need to look up
No, they didn't withhold anything (at least not that I'm aware of)
You requested $200,000 and received same?
And seriously? I would owe $78,000? Why so high? I had anticipated the 10@ penalty but this seems high
yes, requested and received same
The additional $200,000 places you in a 33% tax rate
Of course your withholding from work would assist you too.
yeah, I figured I'd be pushed up in the tax bracket
What do you mean by "withholding from work"? sorry, not much of a tax expert! LOL
I can give you a link to an easy estimator and you can gather your true info and enter to see what you are really facing if you would like
the link would be wonderful!
Every time you get paid state and federal taxes are withheld
along with SS and Medi
The federal and state withholding are what protect you from tax owed when you file
Well, I know I get hosed every year in taxes as I don't have all that much to deduct.
that is unfortunate
Here is the link
they take out over $30,000 in taxes
That will assist you then (the withholding)
that's great. Hope it helps a lot! LOL
I wish I could tell you would not owe
I'll give the link a try. Any other thoughts on what I can do now that might get that amount lower?
Buy something? Build something? Anything?
that would be deductible
If you do not itemize then your standard deduction is all you can look to to assist, your contributions befor ethe distribution will help but doing anything at this point is going to be very limited
Even if you were to buy a home the interest woudl not be enough to assist as we are close to year end
Count up all your charitable gifts
I just finished re-financing my home
And I do itemize
Then you would look to all on the Schedule A
With church and other donations, I usually average around $1200 in charitable donations
Charitable gifts will increase that
I was using standard deduction so when you estimate
get your last year return
use those numbers and add anything else you can find to increase
and I ususally end up with around $5,000 coming back from the feds and about $500 from state
Then you need to make sure you use your last year return when you estimate
that tax liability will decrease a lot
One last question
Knowing only what I've been able to share today, do you think I can possibly get that amount owed down to something reasonable?
A certain yes
As I said I used standard deduction but you have much more to reduce
thank goodness! :0) I've got about $30,000 saved up to pay. Better start saving more!
Best wishes to you and let me knwo if you need any help with the estimating
after you get the info together
thank you. Have a wonderful day!
You are most welcome
I will come back if I need any further help. Just rated you too!
Thanks, XXXXX XXXXX forward to assisting you again