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Richard, Tax Attorney
Category: Tax
Satisfied Customers: 55442
Experience:  29 years of experience as a tax, real estate, and business attorney.
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I have decided I need $82,000 from 2 different retirement accounts,

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I have decided I need $82,000 from 2 different retirement accounts, one is an IRA, with a balance of approx $61,000 and other is a 401K with a balance of $120,000. In order to cover the tax liability how much would I need to withdraw in total? I am 46 years old, I live in IL.

Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good morning. Can you tell me what marginal income tax bracket is applicable to you? And, what is your filing status...married, filing jointly; married, filing separately; or single?

Customer: replied 5 years ago.

I divorced this year, our combined income last year around $200K we filed jointly. This coming tax year I will file single with an income of around $60K.

Thanks. I have set forth the 2012 income tax brackets below. The withdrawals will be taxed as ordinary income and be added to your existing taxable income. I don't know what deductions you have other than the standard deduction and what dependents you may have, but the additional $82,000 is going to put you in the 25 to 28 percent bracket for the withdrawal. In addition, because you are under 59 1/2 years of age, there is an early withdrawal penalty of 10%...$8200. So, to make sure you had enough taxes withheld, you would need to make a withdrawal of $82,000 divided by 62% to have enough to cover both the 28% tax plus the 10%penalty...which would be a withdrawal of $132,258.

<table border="1" cellspacing="0" cellpadding="3" width="450">
Tax BracketMarried Filing JointlySingle10% Bracket$0 - $17,400$0 - $8,70015% Bracket$17,400 - $70,700$8,700 - $35,35025% Bracket$70,700 - $142,700$35,350 - $85,65028% Bracket$142,700 - $217,450$85,650 - $178,65033% Bracket$217,450 - $388,350$178,650 - $388,35035% BracketOver $388,350

Over $388,350

Customer: replied 5 years ago.

What effect, if any, does it have on my personal tax liability that I am using the money as capital to start a small business? And I am sure to take a loss on the business during this yeear.

I'm so sorry for the delay...lunch break.

Unfortunately, that would not exlude it from taxation. Although a deductible loss in your business would reduce your net taxable income.

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