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socrateaser, Lawyer
Category: Tax
Satisfied Customers: 38910
Experience:  Retired (mostly)
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I have created a tax mess!I need to know approximate taxes

Customer Question

I have created a tax mess!I need to know approximate taxes I will owe on money I withdrew.I withdrew $10,000 from my roth ira that at the time had a value of $24,171.I also withdrew $4,000 from the same account when it's value was $15,090.I also withdrew $2500 from a 529a that was not for a qualified education expense.I know you can only give me an estimate.My next question is should I make an appointment with my local IRS office to start paying my taxes on this,or see a CPA.
Submitted: 6 years ago.
Category: Tax
Expert:  socrateaser replied 6 years ago.

I can't calculate your tax, because I don't know the amount of your original contributions and your earnings at the date of the withdrawal.

The formula for calculating the tax would be:

T = (0.1 + R) * (W * E/(E+C))


T = total tax
W = withdrawal amount
E = earnings on withdrawal date
C = contributions on withdrawal date
R = taxpayer's marginal tax rate expressed as a decimal (e.g., 28% = 0.28)

Hope this helps.

Customer: replied 6 years ago.
my original contributions were $25,936.88
Expert:  socrateaser replied 6 years ago.
Please click Accept for my original answer, and I will be happy to consider your new question.

Customer: replied 6 years ago.
I didnt get a full answer the first time I gave you more info so you can give me the answer on what my tax burdern will be.
Expert:  socrateaser replied 6 years ago.
The numbers you are providing suggest a possible mathematical error, because your contributions exceed your account value (in other words, the account has suffered an overall loss, which would mean that you have no tax liability for the withdrawals). That said, if we assume that your withdrawls equal your earnings and put you in the 28% marginal bracket for federal tax, and 4% state, then you would have a total tax liability of about $3,111.00, in my estimation.

Hope this helps.