Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

We are about to settle a lawsuit regarding an interpleder…

Customer Question
We are about to...

We are about to settle a lawsuit regarding an interpleder with a bank and someone who self-dealt themselves a huge portion of an IRA. This person lives in Maine and is subject to Maine State income tax.

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

His Federal income tax bracket is 28% His Maine Tax is about 7%.

Accountant's Assistant: Is there anything else the Accountant should be aware of?

Is the 7% of Maine tax fully refundable on his 2017 federal tax?

Submitted: 1 year ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Customer reply replied 1 year ago
The lawyers want us to lessen our payout 35% of our settlement to the defendant because of combined 7% Maine state income tax plus 28% federal income tax. I'm saying we should only lesson the pay out to us by 28% because the Maine tax is fully refundable from the federal tax on his 1040 and schedule A of the this tax year 2017.
Answered in 19 minutes by:
8/2/2017
Tax Professional: emc011075, Tax adviser replied 1 year ago
emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3,976
Experience: IRS licensed Enrolled Agent and tax instructor
Verified

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

A deduction is not a credit. The deduction of state taxes on Schedule A is not fully refundable. A deduction only reduces your taxable income but not bellow 0. For instance, $1000 deduction in 28% tax bracket will reduce your tax liability by $280, NOT $1000. There are another things to consider. Does the person itemize his deduction or is he claiming standard deduction? If he does not have enough to itemize he will not benefit from the deduction in any way.

Until the person files his tax return there's no way to tell how the deduction affect is his taxes. The most benefit he will receive (assuming 28% is his effective tax rate, not tax bracket), will be $28 on every $100 he can deduct, if he can deduct it.

Ask Your Own Tax Question
Tax Professional: emc011075, Tax adviser 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?

Ask Your Own Tax Question
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 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

1,338 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
My sister and I inherited our father's home upon his death
My sister and I inherited our father's home upon his death April 20th, 2017. We sold the property for $131,900 and then both received proceeds from the sale. I received $59,730.01 withholding tax 2.5%… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
My business settled an out of court lawsuit. I am confused
My business settled an out of court lawsuit. I am confused as to tax treatment as it is an unusual case.Business is a LLC whose normal course of business is Real Estate Brokerage services. That is rep… read more
taxmanrog
taxmanrog
Master\u0027s Degree
1,049 satisfied customers
How much tax would I have to pay on a 1/2 million medical
How much tax would I have to pay on a 1/2 million medical settlement( Hip replacement gone wrong? … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I received a federal law suit settlement this spring 2016
I received a federal law suit settlement this spring 2016 from an alleged employment discrimination wrongful termination suit. Not sure if have to pay anything to anyone - but if I do - I do not know … read more
emc011075
emc011075
Tax adviser
3,976 satisfied customers
I was suit by an employee we settled for $ 65,000 with a
I was suit by an employee we settled for $ 65,000 with a monthly installment of 4000 to plaintiff and 2000 to plaintiff lawyer. how do I report this on form 1099 misc. Per the legal agreement, the def… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
If I settle a lawsuit on my property where the total amount
If I settle a lawsuit on my property where the total amount due is reduced by $175,000, is that amount considered a "loan modification" or is it ordinary income for tax purposes? The settlement agreem… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Hi there, I have a friend who represented himself in a lawsuit
Hi there, I have a friend who represented himself in a lawsuit regarding the wiretap act and illegal intercepts. The defendants have made a settlement offer for his emotional distress. My question is … read more
socrateaser
socrateaser
1,031 satisfied customers
We need wording to be used in a settlement document with an
We need wording to be used in a settlement document with an insurance company. The defendents attorney is willing to write someting in that might be helpful with us claiming a loss with the IRS. Our l… read more
socrateaser
socrateaser
1,031 satisfied customers
I am in the US and expect to have a suit for personal injury
I am in the US and expect to have a suit for personal injury damages. I expect to receive damages in the amount of compensatory and punitive. I understand that punitive damages are not taxable in a ju… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I had to get a lawyer to fight for disability. We won and
I had to get a lawyer to fight for disability. We won and the lawyer gets 33%. They give the toal amount to me and I right a check ti the lawyer every month. Can I deduct the amount the attorney gets?… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I was in a lawsuit against a former employer (W-2employee)
I was in a lawsuit against a former employer (W-2employee) for improper classification of salary exemption status. The lawsuit was settled, and was paid in two checks. I contacted the lawyer that hand… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I have a tax question. In 2010, I received an award in an
I have a tax question. In 2010, I received an award in an ADA discrimination lawsuit settlement. An employer discovered after starting me in the hire process that I have a prosthetic right eye. The jo… read more
Anne
Anne
Master Tax Preparer
1,328 satisfied customers
If a defendant in a lawsuit settles his claim with a plaintiff
If a defendant in a lawsuit settles his claim with a plaintiff for $100,000 and the defendant pays $50,000 and the other $50,000 is paid by a third-party, is the $50,000 paid by the third party taxabl… read more
Merlo
Merlo
Tax Consultant
558 satisfied customers
HELLO I AM READYING TO SETTLE A 3 YEAR OLD CONSTRUCTION
HELLO I AM READYING TO SETTLE A 3 YEAR OLD CONSTRUCTION LAWSUIT, AND NEED ADVICE ON HOW, IF POSSIBLE, NOT TO HAVE TO PAY INCOME TAX ON THE PROPERTY DAMAGE AND PROPERTY LOSS SETTLEMENT. THE COSTS TO RE… read more
Wayne Brasch
Wayne Brasch
Accountant and Business Consultant
Master Degree
718 satisfied customers
Hello, my name isXXXXX husband, Rob, is in the home stretch
Hello, my name isXXXXX husband, Rob, is in the home stretch in settling a lawsuit against his former employer. In Sept, 2001 he began traveling from St. Louis, MO to NY for his company. This travel we… read more
Merlo
Merlo
Tax Consultant
558 satisfied customers
I have just received a one-time payout from a non-qualified ...
I have just received a one-time payout from a non-qualified deferred compensation retirement plan as part of a divorce settlement. It is not eligible as a rollover and I have been advised I will recei… read more
Marvin,EA
Marvin,EA
Enrolled Agent
Bachelor's Degree
1,605 satisfied customers
I received a partial settlement through the courts where ...
I received a partial settlement through the courts where our financial advisor stole our money. I rec''d a 1099-misc. (the theft happened in 2001 - just rec''d the partial recovery. How should this be… read more
Mark D
Mark D
Enrolled Agent
Master's Degree
1,338 satisfied customers
If an employee receives a severance that includes an amount ...
If an employee receives a severance that includes an amount for lawyers fees and this amount is paid by the employer directly to the lawyers, should this amount be included on the employee's W-2 as wa… read more
jgordosea
jgordosea
Enrolled Agent
Bachelor's Degree
2,885 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