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smthmelv
New Member

Considering withdrawing out of my IRA account. Trying to figure out how much tax I should take off (I'm in NE, under 59yrs). I don't want to owe next year. Help, please?

 
3 Replies
Bsch4477
Level 15

Considering withdrawing out of my IRA account. Trying to figure out how much tax I should take off (I'm in NE, under 59yrs). I don't want to owe next year. Help, please?

Normally you would be taxed at your marginal tax rate for both federal and state income tax and have a 10% federal tax penalty on the amount withdrawn. However if the withdrawal is COVID related you can return the withdrawal within 3 years and avoid those tax consequences. See this article:

https://www.marketwatch.com/story/coronavirus-stimulus-package-tax-relief-withdraw-100k-from-your-ir...

 

fanfare
Level 15

Considering withdrawing out of my IRA account. Trying to figure out how much tax I should take off (I'm in NE, under 59yrs). I don't want to owe next year. Help, please?

i have an amount in mind to take out next from my IRA.

I know what my other income is.

I do a trial tax return for 2019  with a 1099-R showing that amount.

I know exactly how much tax it is going to cost me .

Opus 17
Level 15

Considering withdrawing out of my IRA account. Trying to figure out how much tax I should take off (I'm in NE, under 59yrs). I don't want to owe next year. Help, please?

If this is not COVID-related:

 

You can use the TaxCaster or IRS calculator to estimate the tax you will owe.  It will likely be between 25% and 34%, depending on your total income, and including the 10% penalty for early withdrawal. 

 

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

 

https://www.irs.gov/individuals/tax-withholding-estimator

 

NE's state income tax rate is 6.84%, there is no state tax penalty for early withdrawal.

 

If you can certify the withdrawal is due to a COVID-related hardship, you have additional options:

  1. You don't have to pay the 10% penalty for early withdrawal,
  2. You can spread the income tax out over 3 years.
  3. You can put the money back within three years and get any tax you paid refunded to you.
*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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