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Hello! I am a CPA here to assist you with your tax questions. My goal is to provide you with excellent service today.
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What type of other income do you have? And are you married, or single?
Okay, since you haven't stepped into chat yet, I will calculate the tax for you based on this being your only source of income, both under married and single.
If you are single, your tax would be $152,754 for federal.
If you're married, your federal liability will be $140,340
I would suggest taking $250,000 this year, and then $250,000 early in 2014. This will really save you on your tax bill. If you are married, the tax on $250,000 would be $51,817 - and taxes won't change drastically from 2013 to 2014, so you would pay about $104,000 total instead of $140,000 for taking the distribution in one year.
If you are single, your tax would be $62,836. Again, you save tens of thousands of dollars by splitting your distribution up.
This is because the $500,000 puts you in the 39% tax bracket, so some of your money is getting taxed at nearly 40%!
For state tax, if you are single I calculate that you will owe $31,375 on $500,000 of income
In West Virginia, your tax is the same if you are married as well.
The tax on $250K would be $15,125. So, you don't gain much from state taxes by splitting the distribution, but you stand to gain lots of money (enough to pay state tax!) by splitting it for federal taxes.
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