Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

This answer was rated:

Please estimate my IRS and CA-540 tax liability for 2017.

Plan to file, "Married filing...
Please estimate my IRS and CA-540 tax liability for 2017. Plan to file, "Married filing separately"
Gross salary income: $185,000. I will take early withdraw from IRA and 401K funds towards purchasing a home.
Distribution Income from Rollover IRA: (not 59 1/2 yet): $144,700 (expect to pay income tax + 10% penalty)
Distribution Income from prev employer 401K: $66,000. (expect to pay income tax, but no penalty according to Fidelity plan)
Expected deduction from Mortgage interest and Property tax $16,640
Adjustment in income due to alimony payments: $37,200.
What will my 1040 tax be? CA-540 Tax? Should I pay the taxes as soon as I take the distribution?
Will Pease limitations reduce my ability to use itemized deductions?
Show More
Show Less
Ask Your Own Tax Question
Customer reply replied 1 year ago
Alternate scenario: 401K distribution: (no penalty): $59K, Rollover IRA distribution: $81K (income tax + 10% penalty)My employer has withheld the following amounts, as of the end of March 2017:
$7.16K Federal withholding
$0.67K Federal MED/EE
$2.86K OASDI/EE
$3.38K CA Withholding
$0.41K CA OASDI/EEWhat should these numbers be, so that my end of year tax-liabilty is very close to my amount of tax withheld?
In other words, how much should I increase or decrease my with-holdings so that I will owe or will be owed little on my 2017 tax return?
Answered in 2 days by:
4/5/2017
ABC Accounting Group
ABC Accounting Group, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 889
Experience: Business Consultant/Accounting Manager
Verified

Hi. For your 1040. If you file married filing separately, your taxes will be around $80k after withholdings and $50k for scenerio 2. If you take a 401k loan out, you will not be taxed right now. The withholdings appear to be too low.- by around $2k/quarter.

Ask Your Own Tax Question

CA would be around 18k for sceneirio 1, around an additional 8k for #2, and withholdings look to be fine.

Ask Your Own Tax Question
Customer reply replied 1 year ago
My 401K does not allow a loan. $50K for scenario-2 means in addition to my payroll withholdings?
So $8K would the taxes owed due to the 401K and IRA distribution?.
Also, for my 2017 tax return, will I no longer (due to Pease limitations or expiration) have the benefit of itemized deductions (mortgage interest, property tax) to reduce my AGI? What about my alimony payments?

The majority of the taxes are from the withdrawal scenerio's.

With alimony - spousal support payments are deductable, but not child support or property distributions.

Ask Your Own Tax Question
Customer reply replied 1 year ago
I am still not clear. Let's just focus on scenario 2 only.1. Salary Income: 185K gross salary - 37.2K alimony = 147.8K Income before taxes.
2. 401K Distribution (no extra 10% penalty): $59K income before taxes.
3. IRA Distribution (with 10% tax penalty): $81K income before taxes.
Total Taxable income from 1, 2 AND 3 = $287.8KWhat is my total IRS tax liability for #1?
What is my total IRS tax liability for #2?
What is my total IRS tax liability for #3?What is my total CA tax liability for #1?
What is my total CA tax liability for #2?
What is my total CA tax liability for #3?Thank you,

Hi. The first email gave you an estimate for #1 and #2. I can give you a less rough calculation, but it will take a little bit and will need me to offer premium service. I will send an offer. Thank you.

Ask Your Own Tax Question
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,337
Experience: Taxes, Immigration, Labor Relations
Verified

Different expert here...

First of all your approach to calculate tax liability separately for each income item is not correct...

Tax liability is calculated based on TOTAL income, filing status , deductions, etc.

So far

- Salary Income: 185K gross salary

- 37.2K alimony deduction

+ 401K Distribution (no extra 10% penalty): $59K income before taxes.

+ IRA Distribution (with 10% tax penalty): $81K income before taxes.

= AGI - adjusted gross income $287.8K

Assuming Married filing separately

no dependents

Assuming itemized deduction $20,000 - please verify

=

Taxable Income $271,765

Regular Tax:$80,452

early distribution penalty for IRA $8100

Total estimated federal tax liability - $88,552

minus withholding from wages and retirement distributions.

That is for federal estimate - please let me know if that is clear and we will move forward.

Ask Your Own Tax Question
Customer reply replied 1 year ago
https://taxfoundation.org/2017-tax-brackets/According to the above, for 2017, there is a "Pease" limit on itemized deductions. $156.9K for my filing status.
So does this mean I don't get to take my $16.6K (2017 Property tax and Mortgage interest, donations) as itemized deductions? If that is the case, can I take the $6,350 standard deduction?
Also, Pease Personal Exemption phase out begins at $156.9K and ends at $218.15K. I am not sure what this means. Can you explain?Yes, I understand my tax liability is based on TOTAL income, but I want my payroll with-holdings to be correct for my salaried income. I plan to pay my IRA and 401K taxes in Q4, when I make the withdraw, and not from my paychecks. Does that make sense?

You are correct - itemized deductions might be limited

Because of that the amount of deduction may be reduced.
You still may have itemized deduction larger than the standard amount.

To determine if you are affected by that limit - we need to prepare itemized deduction worksheet.

I am attaching this worksheet

But before going to details - we need to know the amount of your estimated deduction.

Ask Your Own Tax Question
Customer reply replied 1 year ago
OK, I did the worksheet. I got $12,920 for Total Itemized deductions.

So - the actual reduction in your situation is a very little.

You originally wrote - Expected deduction from Mortgage interest and Property tax $16,640

Now I see that you are using $12160...

Please verify if you are using correct amount.

Ask Your Own Tax Question
Customer reply replied 1 year ago
Yeah, I am predicting the future a bit, so my estimates of deductions and required withdraws have changed.
Customer reply replied 1 year ago
But here is a related question - As long as I pay in 2017 (withholdings + estimated taxes paid) an amount = or greater than my 2016 tax liability, then I will not be penalized. So if my income in 2017 is significantly higher than in 2016, I can actually wait till 2018, to pull more IRA money out, in order to pay taxes. I have till Jan 15th to pay estimated taxes for distributions I take in Q4-2017, right? Does this strategy make sense? To delay as much as possible, the withdraws, to "spread out" my income, as much as I can.

Yes - that is correct.
You may pay some of your tax liability with your tax return.

You are talking about underpayment penalty.

Generally, most taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and estimated tax payments, or if they paid at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller.

As long as you will have funds to pay all taxes before the due date - and you the amount you expect to pay - that is OK.

On the other hand - underpayment penalty is based on the annualized installment calculation method using the interest rate set by the IRS.

Current rate is 4%.

If you borrow the money and pay higher interest - may be underpayment penalty is better choice.

But otherwise you are correct - as long as you pay at least the tax shown on the return for the prior year - there will not be any underpayment penalty.

.

I appreciate if you take a moment to rate the answer.
Experts are ONLY credited when answers are rated positively.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,337
Experience: Taxes, Immigration, Labor Relations
Verified
Lev and 87 other Tax Specialists are ready to help you
Ask your own question now
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a tax professionalLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,337
33,337 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev 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

1,338 satisfied customers

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

Richard

Richard

Tax Attorney

4,512 satisfied customers

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

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

59 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,569 satisfied customers

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

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 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.

< Previous | Next >

Related Tax Questions
I am under 59.5 years of age and may need to withdraw all my
Hello. I am under 59.5 years of age and may need to withdraw all my money from a previous employer's 401k plan to pay for a house my wife and I are looking to purchase. It is NOT a first home, but it … read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,674 satisfied customers
I lost my job and jumped the gun and took a cash out on my
I lost my job and jumped the gun and took a cash out on my 401K. Now I don't need it. I still have not received the check and did not cash it. I all ready lost about 24k just by doing that. what are m… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,328 satisfied customers
I am unemployed due to a disability, had to liquidate my
Hi I am unemployed due to a disability, had to liquidate my 401k, paid 10% early withdrawal penalty, I have about 22k in my checking account. To avoid more penalties what should I do? I have 60 days t… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,569 satisfied customers
I know I can withdraw 10k from my 401k for a down payment
Hello,I know I can withdraw 10k from my 401k for a down payment with no penalty. Is this pre or post tax?Thanks, Alex… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
I am recently divorced. I have 3 QDROs that have been filed
Hello, I am recently divorced. I have 3 QDROs that have been filed and approved for my ex husband's 401K and pension. I want to roll over some of that amount and withdrawal the rest. I understand that… read more
Lev
Lev
Tax Advisor
Bachelor's Degree Equivalent
33,337 satisfied customers
The company my husband worked an early buyout of s
The company my husband worked for offered an early buyout of his retirement funds. We took the lump sum payment with taxes withheld on the gross amount. We wanted to invest those funds so we could def… read more
Lev
Lev
Tax Advisor
Bachelor's Degree Equivalent
33,337 satisfied customers
401k rollover question. I have approx $280k in a 401k. I
401k rollover question. I have approx $280k in a 401k. I am leaving a job, and becoming an independenct contactor. I do have a loan against my 401k of about $17k. I would like to take money out of my … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,569 satisfied customers
i had a 401K distribution for $95k; they took out $19k (noone
i had a 401K distribution for $95k; they took out $19k (noone explained they should have just rolled it into an IRA)..I put the remaining $76k into an IRA and then I took out $44k to buy my house. Do … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,569 satisfied customers
This year (2012) I retired from one company effective Feb 1.
This year (2012) I retired from one company effective Feb 1. My year to date earnings with them including severance Pay was 161,941.86. Total Fed Tax Withheld was 39,388.36. Other taxes withheld were … read more
Lev
Lev
Tax Advisor
Bachelor's Degree Equivalent
33,337 satisfied customers
I want to rollover $10,000 from a 401K account to an investment
I want to rollover $10,000 from a 401K account to an investment IRA account. The 401K account manager says that there is a 20% mandatory withholding for income taxes. This means I must withdraw $12,50… read more
geedubya55
geedubya55
Owner
Bachelor
187 satisfied customers
Hello, I have dual citizenship (Dutch / USA) and have worked
Hello, I have dual citizenship (Dutch / USA) and have worked in the USA from 2006 - 2010. During that time I've contributed to a 401 k plan. After ending my job and moving back to the Netherlands last… read more
Wendy Reed
Wendy Reed
Master Tax Advisor Enrolled Agent
Master's Degree
60 satisfied customers
Hi, quick question. Im considering taking an early partial
Hi, quick question. I'm considering taking an early partial disbursement on my 401k in order to resolve some credit card debt. Married, joint income of 155K, live in CA, was considering withdrawing ap… read more
Lev
Lev
Tax Advisor
Bachelor's Degree Equivalent
33,337 satisfied customers
You gave me a rough idea a couple of months, ago, but now,
You gave me a rough idea a couple of months, ago, but now, I have a little bit specific information. Your answer was very helpful, but I just wanted to go over with this you, again, because now, I act… read more
Merlo
Merlo
Tax Consultant
558 satisfied customers
I made $22,000 in after tax contributions to my 401K. I rolled
I made $22,000 in after tax contributions to my 401K. I rolled over the entire 401K, $185,000 to an IRA. I took out $10,000 from the IRA. Is there a way to avoid paying additional taxes on this money … read more
Marvin,EA
Marvin,EA
Enrolled Agent
Bachelor's Degree
1,605 satisfied customers
About 8 years ago my wife invested $75,000 with a brokerage
About 8 years ago my wife invested $75,000 with a brokerage firm who used it to buy a Hartford annuity. They characterized it as "like a 401k" We never madeany additional investment or took anything o… read more
Chad Oberg
Chad Oberg
Director
Bachelor's Degree
172 satisfied customers
I mistakenly withdrew the 401k with 20% withholding by IRS.
I mistakenly withdrew the 401k with 20% withholding by IRS. Checked online, it's said if I open within 60 days a rollover IRA account, i could avoid 10% penalty. To get back 20% withholding, I need to… read more
Bill
Bill
Master's Degree
2,278 satisfied customers
On my pay check under taxes, I have four categories.
On my pay check under taxes, I have four categories. Fed Withholding, Fed MED/EE, Fed OASDI/EE, and South Carolina Withholding. Which one is for Social Security?… read more
Sandi Hargrove, SkyHawks
Sandi Hargrove, SkyHawks
Master Tax Pro and Enrolled Agent
Master Degree
1,254 satisfied customers
iam 57 i have 300,000.00 in an anuity. if i cash it out i ...
iam 57 i have 300,000.00 in an anuity. if i cash it out i will pay 20% tax federal who is responsable for the other 20% penalty me or is it taken out with the initial 20% percent, and can i claim it a… read more
Christopher Phelps
Christopher Phelps
Sole Practitioner
Master Degree
1,180 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