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Returning Member
posted Dec 25, 2021 9:52:16 AM

Which option will this be taxed under

How will funds from a Traditional IRA be taxed if I do a withdrawal? The funds are invested into a Mutual fund.

 

Qualified dividends, Interest or IRA/Pension distributions.

0 7 1671
7 Replies
Level 15
Dec 25, 2021 9:57:18 AM

It will be IRA/Pension distributions.

 

Any interest/dividends or cap gains that the Mutual fund might have issued during the year, are considered to be within the IRA.....and anything you take out is considered as-if just a cash distribution.

Returning Member
Dec 25, 2021 10:09:11 AM

I ran the numbers using the turbotax calculator and I put in a hypothetical number ($50k) and it shows no fed tax is owed why is that? This is using a hypothetical Social Insurance Benefits number ($21,500)

Level 15
Dec 25, 2021 10:51:52 AM

Did you enter the IRA distribution correctly ?   

Returning Member
Dec 25, 2021 10:57:42 AM

Sorry. I forgot to mention when I put the $50k in the Interest box it shows no tax owed. 

Level 15
Dec 25, 2021 11:00:17 AM

EVERYTHING coming out of an IRA is taxed as ordinary income ...  put the distribution in the correct box for a correct estimate. 

Returning Member
Dec 25, 2021 11:44:54 AM

Right I think I follow now. I was just curious as to why there isn’t tax owed if I put the $50k in the Interest box. 

Level 15
Dec 25, 2021 12:08:50 PM

System is not fully functional for the 2021 tax year as it is being switched to the 2022 tax year since the 2021 tax program is operational.  Note the spot for ordinary dividends is totally missing.