1. I hover in the 22% tax bracket with retirement income. I'm withholding enough, I have not had a year yet where I have not had misc additional income (which I do have withholdings taken out). If I use the w4 tax calculator should I change my withholdings for 2024 -or- have "additional" withholding taken for this current tax year?
2. I will have a small sum appx $23,000 from my deceased mothers estate. I will be issued to me but I will be splitting it amongst my 4 other siblings. Do I need to have the withholdings done prior to disbursement to me?
3. I will need to purchase a vehicle this year. Does it make more sense to withdraw the funds from my IRA or do a car loan?
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For the first item, it is unclear as to why you need want to change your withholdings or have additional withholding taken out for 2024. It appears from your comments that you have enough tax withheld from the retirement income and additional misc income to cover any tax liability.
In regards to the sum you will be receiving from your mother's estate, the amount may or maynot be taxable to you. It will depend on the nature of the distribution. Generally, beneficiaries do not pay income tax on money or property they inherit. There are exceptions for retirement accounts, life insurance proceeds and savings bond interest.
For the purchase of a vehicle, If you withdraw funds from a Traditional IRA and you have no basis, the withdrawal would be taxable. If you had basis in the Traditional IRA, only a portion of the withdrawal would be taxable. If the withdrawal was from a Roth IRA, such withdrawals are typically not taxable if you are over 59 1/2 years old and the account has been open for more than 5 years.
If you were to obtain a car loan for the purchase of the vehicle, the interest would not be deductible as an itemized deduction.
Hey there - I hope your day is going great!
To assist you on your first two questions, the best things to do it utilize the IRS tool estimator to assist you in understanding your tax implications as a whole. If you are currently utilizing withholding and filing out a W4, the best approach is to update this as your tax situation changes. If you are not withholding enough, adding additional withholding will not hurt you. If you over withhold you will receive that money back in a form of a refund when you file your taxes. If you can have withholding disbursed with your income you are receiving from the estate, that would benefit you, and if you cannot you can make estimated quarterly tax deposits to cover that income received.
For your final question, regarding taking funds from your IRA or getting a car loan. You will be faced with tax implications when pulling money from your IRA. Traditional IRAs you need to consider your current tax bracket and hw the withdrawal might push you into a higher tax bracket. For a Roth IRA consider whether you'd be withdrawing contributions or earnings and the associated taxes and penalties.
https://www.irs.gov/individuals/tax-withholding-estimator
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