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Wife made $9,800 I made $138,000 we cashed in $36K PERS from wife, would MFS be better than MFJ. did MFJ and have $3100 tax bill due. can i reduce the penalty?

I saw there may be other exceptions for section 457 accounts "You took the money out of a section 457 plan that you didn't originally roll over from another retirement plan that was a qualified plan."  I'm not sure what this means.

we itemize but nothing out of the ordinary, simple things like mortgage interest, home office expenses, donations, so trying to figure out if there is a way to reduce the penalty on the PERS distribution.

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1 Best answer

Accepted Solutions
Anita01
New Member

Wife made $9,800 I made $138,000 we cashed in $36K PERS from wife, would MFS be better than MFJ. did MFJ and have $3100 tax bill due. can i reduce the penalty?

The penalty would not change for a different filing status, unfortunately, it's fixed amount based on the withdrawal amount.  Penalties usually cannot be reduced by any type of deduction or credit.The withdrawal amount, however, also increases the taxable income on our return and can result in some income being taxed at a higher rate and limits on itemized deductions.

You never want to just change the filing status on an already completed joint return because the results will not be valid.

You can, however, start a new return under the File tab on the upper left and enter two separate married separate returns.  There also is a what-if worksheet you can use by entering the words what-if in the search box just above the list of forms in your return.  To see that list of forms, click on the Forms icon in the upper right.

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1 Reply
Anita01
New Member

Wife made $9,800 I made $138,000 we cashed in $36K PERS from wife, would MFS be better than MFJ. did MFJ and have $3100 tax bill due. can i reduce the penalty?

The penalty would not change for a different filing status, unfortunately, it's fixed amount based on the withdrawal amount.  Penalties usually cannot be reduced by any type of deduction or credit.The withdrawal amount, however, also increases the taxable income on our return and can result in some income being taxed at a higher rate and limits on itemized deductions.

You never want to just change the filing status on an already completed joint return because the results will not be valid.

You can, however, start a new return under the File tab on the upper left and enter two separate married separate returns.  There also is a what-if worksheet you can use by entering the words what-if in the search box just above the list of forms in your return.  To see that list of forms, click on the Forms icon in the upper right.

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