Hello! I am a CPA here to assist you with your tax questions. My goal is to provide you with excellent service today.
How are you today?
Sadly, I have the flu
In order to avoid the 10% penalty you would need to be considered permanetly disabled
Oh man, I'm so sorry.
I am permanently disabled
Yes, you receive social security so you would meet the IRS definition of disabled.
how much tax will I be assessed and when I roll that into the 70K I want to withdrawl, what would be the total amount taken out of my 401k
Also you will owe tax on the withdrawal, and typically the administrator will hold 25% back for taxes
I will be above 25% tax bracket, because they will add my ss income as taxable. That is what they did last year
So you will be in the 28% tax bracket - are you married or single?
Let me look at the bracket to make sure.
Yes, you would be in the 28% tax bracket.
OK, so if I withdrawl 70K for the condo, and they put aside 28% of that for taxes, what would the total amount of the withdrawl? (I think they tax me on the 28% tax withdrawl as well as the amount of funds I need)
Yes, if you withdrew 70,000 you would have $19,600 withheld for taxes, so you would get $70,000 - $19,600
OK then. How much taxes do I need to put aside, so that I can get the full 70,000 for the condo? Is there a calculation for that?
Yes let me do that for you.
if you could also give me the equation, so that if I need to withdrawl more or less, I can figure it out?
If you withhold $97,222 you will net $70,000
but, won't they add in my social security ($26,000) as income? That would put me in a higher bracket, I believe. That is what the CPA told me last year.
You're still in the 28% bracket with your IRA withdrawal
and the Social Security
You're in the 28% bracket up to $183,000 of income
so you're not going higher than 28%
that's great. Because I have no savings and my ss is my only income, I want to make sure that I withdrawl enough to cover all taxes.
So, when I make the withdrawl, I tell my 401k to also put aside 28%? or how do I tell them what I want to do?
would they just use the calculations you did for me? What is the equation, so that I can know and double check there work.
Well, they will probably just withhold 20-25% they don't typically give you an option on how much
and then you would set the rest aside or send in an estimated payment
If they do that, how will I know how much more I have to withdrawl
can you give me the equation?
If you withdrawal $97,222 subtract out $27,222 to arrive at the $70,000 that you need
Oh, I see what you're saying now. I would still withdrawl the 97,222, but send in the difference myself.
Yes, that is correct.
Is there anything else that I can assist you with today?
will our conversation be saved? I just tried to do it and now I cannot see the conversation
will it be emailed to me?
I messed up
Yes, it will. Once you rate, your answer will be emailed to you
It's not lost. No worries. Also, when you log into JustAnswer you will be able to pull it back up
Whew. OK, then. I believe I got the information I need to go condo shopping and have enough money to pay for my taxes.
I understand. It's good that you are planning ahead
Thank you so much!