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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16580
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Hello, I would like to take money out of my IRA. I am aware

This answer was rated:

Hello,
I would like to take money out of my IRA. I am aware there is a 10% penalty. What are the state and fed taxes I need to pay for taking 40k out?

Megan C :

Hello! I am a CPA here to assist you with your tax questions. My goal is to provide you with excellent service today.

Megan C :

How are you today?

Megan C :

To calculate your tax, I would need to know some more information about you.

Megan C :

First, what is your filing status - married, single, head of household

Megan C :

How many dependents do you have/

Megan C :

If you are married, do you file a joint return?

Megan C :

Also, what is your other income? How much do you (and your spouse) make from other sources?

Megan C :

All this is relevant, because it will help determine what tax bracket you are in. The higher your tax bracket, the greater the tax.

Customer:

head of household

Megan C :

Thanks for that information. I'll wait until you have the rest of the information for me.

Customer:

12 year old son, last year income 115k, this year 125

Customer:

I just started a new position in July at 125k

Megan C :

Does the 125 include your 40K withdrawal

Customer:

no it doesn not

Megan C :

Okay thanks for that. Do you take the standard deduction, or do you have mortgage interest and real estate taxes?

Customer:

I believe I take mortgage interest and real estate taxes.

Megan C :

Do you know how much your mortgage interest, real estate taxes, and medical expenses are? Do you make charitable contributions?

Megan C :

I'm trying to give you the most accurate tax total as possible.

Megan C :

But we can eyeball it based on the standard deduction, it should be pretty close. I'd rather tell you too much tax than not enough.

Customer:

$1,561.06, county tax

Megan C :

ok thanks for that

Customer:

medical out of pocket apprx 330/mo and I donate clothes to AmVet and occationally to Amnesty intl.

Megan C :

Your medical would not be enough to get you a deduction, I can already tell.

Customer:

I just started paying out of pocket in July for healthcare

Megan C :

ok

Customer:

all right.

Megan C :

Your 401(k) will bump you from the 25% bracket into the 28% bracket.

Customer:

ok.

Megan C :

So, federal you're looking at $11,200

Megan C :

plus the $4,000 penalty

Customer:

all right

Megan C :

and I'm calculating state tax now. It's a rough figure.

Megan C :

About $3,720

Megan C :

I did that by taking your federal taxable income and seeing the difference between your total income and your income without the 401(k) distribution, using California's income tax calculator.

Megan C :

You're looking at a hefty tax bill on this withdrawal.

Megan C :

Did you have any further questions about this?

Customer:

Yes. It's hefty.

Megan C :

I'm sorry that I didn't have better news

Customer:

I don't. Thank you. You have been very helpful.

Megan C and other Tax Specialists are ready to help you
Thanks, Rose for your positive rating. Please come back and visit me any time you have a question that needs answered. It was a pleasure working with you today.