Yes, lump sum payments can cause taxes to go up. One way to reduce the tax burden is to take smaller distributions instead of one lump sum. This can help reduce tax bracket jumps that result in higher taxes being paid. The option would be selected based on the interview questions you answered. You can view these calculations but viewing the tax return in TurboTax. To view Online follow these steps:
- Sign in to TurboTax
- Select Tax Tools from the left side panel
- Select Tools
- Select View Tax Summary
- Select Preview 1040
To view on the Desktop Version follow these steps
- Login to TurboTax Desktop
- Select Forms in the upper right corner
- Select form 4972
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