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We took out 100,000 out of 401 to buy a house. no taxes

Customer Question
we took out 100,000 out...
we took out 100,000 out of 401 to buy a house. no taxes taken out. is it dollar for dollar if I wanted to donate a lot of money to say St. Jude instead of paying income tax on that amount of money
Submitted: 1 year ago.Category: Tax
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Answered in 8 minutes by:
12/29/2015
Tax Professional: Anne, Master Tax Preparer replied 1 year ago
Anne
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2,439
Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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Hi

I'm Anne. I've been preparing taxes for 27 years and I'll be happy to help you.

Although you get to write off the charitable deduction $ for $ on Schedule A ( https://www.irs.gov/pub/irs-pdf/f1040sa.pdf) up to 50% of your AGI, when you apply Schedule A to your AGI, what your TRUE benefit is is the tax $ amount you would have paid on that income had it not been donated.

So, for example, you are in the 28% tax bracket, and you donate $10,000 to charity, your actual savings in tax $ is 28% of the $10,000 or $2800

If you have further questions, please post them here and I'll be notified.

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Customer reply replied 1 year ago
do you think the least amount of money going out would be to pay the taxes on the withdrawal?
Tax Professional: Anne, Master Tax Preparer replied 1 year ago

Absolutely.

In the example I gave you above, you would reduce your tax bill by $2800

I hope this helps

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Tax Professional: Anne, Master Tax Preparer replied 1 year ago

let me rephrase this

I don't think you'll be able to cover ALL of the taxes, but anything would help.

Did you buy the house?

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Tax Professional: Anne, Master Tax Preparer replied 1 year ago

I would like to continue our discussion......I had one question for you, which was, did you purchase the home? (I'm assuming not)

You asked:

so do you think the least amount of money going out would be to pay the taxes on the withdrawal?

I read this as : the least amount of money going out would HELP to pay the taxes on the withdrawal?

I think it would be difficult to meet your total tax liability, but I think there are some ways to help lessen the $ amount you owe.

If you would like to reconnect with me and explore your options, just respond to this posting and I'll be notified.

Thank you for choosing justanswer.

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Anne
Anne
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2,439
2,439 Satisfied Customers
Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses

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