Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax

I made $94,000 this year and was off and they gave me a

Customer Question
I made $94,000 this year...
I made $94,000 this year and was laid off and they gave me a severance of $42k plus I need to pay back $24k if I don't want to count that as income from a 401k loan. How can I avoid paying so much in taxes? I don't think the severance would even cover it. I did put money into the 401k and I can put some into an IRA, but if I pay back the $24k I don't think I would even have enough to pay what the FEDs want.
Submitted: 2 years ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 8 minutes by:
12/8/2015
Tax Professional: emc011075, Tax adviser replied 2 years ago
emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3,331
Experience: IRS licensed Enrolled Agent and tax instructor
Verified

Hi. My name is ***** ***** I will be happy to help you.

First, if you don't want the 24K treated as distribution subject to income tax plus 10% penalty, you will have to pay it back. Loans from 401K strictly regulated and there's no way around it. Your severance pays are usually subject to 25% withholding rate so federal tax liability will be withheld from the paycheck. If you made contributions to your 401K, the amount will reduce your taxable income.

I need to get a better picture of your tax situation to help you. What's your filing status? Did you have any medical insurance through your employer or other pre tax deductions beside 401K?

Ask Your Own Tax Question
Customer reply replied 2 years ago
I am over 55 so there is no 10% penalty according to Charles Schwab if I leave it with the firm's 401k plan since I was terminated and did not choose to leave. Federal was not withheld. I have about $3,000 in HSA expenses and 7,000 that went to 401k. I've already received the money and it is in a savings account. I made the mistake of signing the agreement too soon or I would have received the money next year. BIG MISTAKE.
Tax Professional: emc011075, Tax adviser replied 2 years ago

If you are over 55, Charles Schwab is correct, there will be no penalty on the distribution (separation of service exemption apply here), but it will still be subject to income tax.

What do you mean with Federal was not withheld? Your severance pay should had been distributed through payroll. What's your filing status?

Ask Your Own Tax Question
Tax Professional: emc011075, Tax adviser replied 2 years ago

Did you make any contributions to HSA this year? HSA expenses will not make any difference. Also, 7K that went to 401K, was it a contribution or repayment of the loan?

Ask Your Own Tax Question
Customer reply replied 2 years ago
I did not let them withhold federal taxes for the final checks.
Customer reply replied 2 years ago
I'm sorry, but I don't think you can help me:(
Tax Professional: emc011075, Tax adviser replied 2 years ago

That's right. I cannot help you if you don't give me information I need to help you.

Ask Your Own Tax Question
Customer reply replied 2 years ago
I did put $3,000 into the HSA and used the amount and the $7,000 was put into 401k not to repay loan. I also have a home business. I think it's too complicated for you to help me by email. I will need to meet with someone. I'm sorry. Thank you for your time.
Ask Wallstreet Esq. Your Own Question
Wallstreet Esq.
Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 586
586 Satisfied Customers
Experience: 10 years experience

Wallstreet Esq. is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,338 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,980 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
I am disabled, i have no taxable income but i was told that
hi, i am disabled, i have no taxable income but i was told that i could get the proff of all the medication i had to buy this and get money back … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,980 satisfied customers
I work part time and have no Federal taxes withheld from my
Second opinion] I work part time and have no Federal taxes withheld from my paychecks. In January for the past three years I filed a W4 form to state that I am exempt from withholding. I have not been… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Second opinion] I work part time and have no Federal taxes
Second opinion] I work part time and have no Federal taxes withheld from my paychecks. In January for the past three years I filed a W4 form to state that I am exempt from withholding. I have not been… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Federal Tax Question: My mother died on Feb 26, 2017. She
Federal Tax Question: My mother died on Feb 26, 2017. She had a trust. Some of the trust money has been distributed to the beneficiaries. The trust earned $400 in interest for 2017. Must the $400 be g… read more
Carter McBride
Carter McBride
LLM
227 satisfied customers
My withholding exceeds my tax liability for each of the the
My withholding exceeds my tax liability for each of the the first three quarters of 2017. However, in December 2017 I received a taxable gift of $78,000 from which nothing was withheld. I know this mu… read more
abci168
abci168
Principal
27 satisfied customers
Will my filing of federal taxes by the April deadline be
Will my filing of federal taxes by the April deadline be according to the current set of laws (e.g. unlimited deduction of state and local taxes) or will the new "reformed" tax bill and its new rules … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,770 satisfied customers
Have a tax question about what is considered taxable income.
Have a tax question about what is considered taxable income. What is your fee? … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,059 satisfied customers
Based on the new federal tax plan released yesterday.... We
Based on the new federal tax plan released yesterday.... We have an LLC with 3 partners and no W-2 wages. We develop and sell software to companies across the world. Starting in 2018, will all of our … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,770 satisfied customers
How do I plan for 2018 federal taxes? I have $150,000
I have $150,000 medical expenses annually for my wife. If those expenses are not deductible in 2018 I'm in chaos. How best to plan? … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,059 satisfied customers
Personal Estimated Federal Tax/Illinois payment: My federal
Personal Estimated Federal Tax/Illinois payment:My federal and IL taxes deducted on regular basis from pay check as employee. But I have S corp for which I know rough profit at 4th quarter since my ve… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,059 satisfied customers
Regarding Federal tax income Form 4952, should I expect my
Regarding Federal tax income Form 4952, should I expect my client to provide me a form to help me fill out line 1 for "investment interest expense paid"? And if so what is the form number?… read more
abci168
abci168
Principal
27 satisfied customers
What rate of withholding is applicable for a domestic
What rate of withholding is applicable for a domestic partnership with 2 foreign partners upon the selling of a rental property in US. … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Suppose my taxable income in 220,000 this year and the tax
Suppose my taxable income in 220,000 this year and the tax rate is X up to 200K, but Y for 200and over, do I pay Y on the full 220K or just that above 200K? … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Two questions on federal tax deductibility: 1. We personally
Two questions on federal tax deductibility: 1. We personally paid legal fees for our manufacturer C Corp. The fees were for assistance in preparing a Research & Development tax credit application. Can… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
If your taxable income is $0 (actually negative) is there a
If your taxable income is $0 (actually negative) is there a penalty for late filing? Do you need to file at all? What is the 2016 filing deadline with an extension?… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,770 satisfied customers
I filed for federal tax extension and was approved, file
I filed for federal tax extension and was approved, file under married separate, after divorce finalized, in divorce decreed I am to file singe from 2016 forward, so do I have to complete the extensio… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,059 satisfied customers
I recently filed amended federal tax returns (1040x) for
I recently filed amended federal tax returns (1040x) for 2013 and 2014. I have received a refund for 2014 and am answering some additional questions for 2013. Do I need to file amended tax returns for… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Im. In 2016 i filed federal taxes and used standard
in 2016 i filed federal taxes and used standard deduction, not realizing i might have some itemized deductions … read more
abci168
abci168
Principal
27 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x