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I am 62 and currently employed with 110k w-2 income for

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Hi, I am 62...

Hi, I am 62 and currently employed with 110k w-2 income for 2017. I unfortunately withdrew great deal of funds from 401k to remodel home. Amount i withdrew is almost 300k. I am very concerned that I am going to owe a great deal in taxes. Is there anything I can do to lessen the taxes i’ll owe. I have mortgage interest and taxes of 48k deduction.

Accountant's Assistant: The Accountant will know how to help. Is there anything else the Accountant should be aware of?

No, I claim my daughter, so I use head of household

Submitted: 2 months ago.Category: Tax
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11/28/2017
Tax Professional: Tax.appeal.168, Tax Accountant replied 2 months ago
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 4,197
Experience: 3+ decades of varied tax industry exp. Tax Biz owner
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Happy Holidays!! Thank you for choosing this Q&A service for assistance. My name is***** am reading over your inquiry. I will respond to you shortly.

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Tax Professional: Tax.appeal.168, Tax Accountant replied 2 months ago

Even with your deductions, you will owe a pretty penny in taxes because the amount withdrawn will be taxable as ordinary income. Unfortunately, there is not any way that you can reduce the tax liability. Did you have the 401k administrator withhold taxes when you withdrew the funds?

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Customer reply replied 2 months ago
but not much; only 15k fed and 10k for state
Customer reply replied 2 months ago
Will I be asked to pay estimated tax penalty or alternative minimum tax
Tax Professional: Tax.appeal.168, Tax Accountant replied 2 months ago

You really should have been paying estimated taxes this year. You might get dinged for underpayment of estimated taxes. As far as the taxes already withheld, the amounts withheld will lessen the blow, but with the amount withdrawn, added with your regular income, that puts you in the 33% tax bracket filing a Head of Household. To get an idea of how much your total tax liability will be, my suggestion is to use one of the tax calculators. I know this doesn't make things any better, but if you at least have an idea upfront of what your tax liability is going to be, the numbers won't be as shocking when it comes tax time. You can find a tax calculator at the following link.

https://turbotax.intuit.com/tax-tools/calculators/taxcaster/

I am checking regarding alternative minimum tax...

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Tax Professional: Tax.appeal.168, Tax Accountant replied 2 months ago

Based on the amount of income you have, AMT will likely come into play. However, because there are different steps involve in figuring whether or not you will have to pay AMT and how much, my suggestion is to use the tax calculator tool that I referenced in my previous response. For more detailed information relating to AMT, you can refer to the following webpage.

https://www.nerdwallet.com/blog/taxes/alternative-minimum-tax-amt/

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Category: Tax
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