Have a Tax Question? Ask a Tax Expert
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?
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.
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.