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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 586
Experience:  10 years experience
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I am the beneficiary to a $20,000 deferred compensation

Customer Question

I am the beneficiary to a $20,000 deferred compensation account a friend of mine had. I know the options and I would like to take all the money and put it in my bank account. I realized there will be a 20% tax taken right away. I am wondering what I will owe the IRS come tax time. I believe that the $20,000 will be added to my salary which is approximately $52,000/yr.If you could help me, I would appreciate it. I also know that I should roll over the money, but this money is something I didn't expect and I have project that I need to complete on my home.thank you,
Cindy Minaya
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.

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

It will depends on your tax bracket. 52K is with the 20K distribution or without? Also what's your filing status?

Expert:  emc011075 replied 1 year ago.

If the 20K is in addition to your 52K, as single you will be in 25% tax bracket, which means the 20% withheld will not cover it. But if your employer is taking more from your paycheck, you may break even. Your estimated liability (before any withholding) as single without dependents is $11,000. 4K will be withheld from distribution so you will need to look at your paystub how much your employer is currently withholding and estimate your withholding for the entire year. This should give you a good idea how much you will owe of if you get any refund.

Expert:  emc011075 replied 1 year ago.

I see you read my respond. Do you have any questions? Is there anything else I can help you with today?