Oh she’s taxed
Tax ?
- Thread starter deadeyededric
- Start date
So it sounds like they definitely neglected to take taxes out, but the tax guy figured in some cost basis stuff and cut the burden in half. I understand what he did but I'm just not an accountant. So I guess I stopped the bleeding some. I just wasn't expecting to get jammed that hard. Lesson learned
Yea, that’s not a pleasant surprise. Glad they were able to help reduce the burden.
I believe a number of companies error on the "safer side", and since they officially don't know if you are considering it as a wd of earnings, or of cost basis, nor if you have "met all the requirements".
They will either list the withdrawal on the 1099R as a Taxable amount not determined and list it all taxable, or just list it all as taxable.
It is then up to you and your tax guy to correctly report it on your tax return (non-taxable, I believe is what you said)......
They will either list the withdrawal on the 1099R as a Taxable amount not determined and list it all taxable, or just list it all as taxable.
It is then up to you and your tax guy to correctly report it on your tax return (non-taxable, I believe is what you said)......
Can't you if your below 59.5 half agree to withdraw and set your distribution to an amount and then take out said amount constantly and consistently over the next 5 years from a Roth account for that 5 year period tax free?
The current problem sounds like it was a one time deal and wanting hit it and quit it on the Roth account.
The current problem sounds like it was a one time deal and wanting hit it and quit it on the Roth account.
I'm a Financial Advisor with a CFA and CFP. As stated before, if you took out less than your total contributions, you shouldn't owe any tax, but the 1099 won't say that because it's up to you to report your contributions to the IRS. You should have records of your contributions over the years via form 5498. If your investment people told you that you wouldn't be taxed, they probably have a record of your contributions also (as long as it was with the same company the whole time - that's where it can get tricky). If you actually withdrew more than your contributions, you have tax and a 10% penalty on the earnings, and probably an advisor that's not giving great advice.
My wife took a new job and I went on her health insurance. I was getting gouged about $1,500/ month for health insurance (small company 15 employees so owner didn't have to offer it at all). My wife was self employed at time before she took a new job. Needless to say when it came tax time, I forgot that I gave myself around an $18,000/year raise and it threw us into a new tax bracket. Uncle Sam was smiling when he got my check! 
Same thing happened to me. Was at a job in 2023 where part of my salary was a bonus (which are taxed at a much higher bracket). When I changed jobs in August of 23, I left all my withholdings the same but this job didn't pay a bonus, so that large tax payment from my bonus wasn't "on our books" for 2024, so we had a fun little surprise this year when our taxes got done.My wife took a new job and I went on her health insurance. I was getting gouged about $1,500/ month for health insurance (small company 15 employees so owner didn't have to offer it at all). My wife was self employed at time before she took a new job. Needless to say when it came tax time, I forgot that I gave myself around an $18,000/year raise and it threw us into a new tax bracket. Uncle Sam was smiling when he got my check!
That’s high. I pay 2150/month for 4.My wife took a new job and I went on her health insurance. I was getting gouged about $1,500/ month for health insurance (small company 15 employees so owner didn't have to offer it at all). My wife was self employed at time before she took a new job. Needless to say when it came tax time, I forgot that I gave myself around an $18,000/year raise and it threw us into a new tax bracket. Uncle Sam was smiling when he got my check!
Congrats on the raise? The horror of having some portion of 18k taxed 2-8% moreMy wife took a new job and I went on her health insurance. I was getting gouged about $1,500/ month for health insurance (small company 15 employees so owner didn't have to offer it at all). My wife was self employed at time before she took a new job. Needless to say when it came tax time, I forgot that I gave myself around an $18,000/year raise and it threw us into a new tax bracket. Uncle Sam was smiling when he got my check!
My wife took a new job and I went on her health insurance. I was getting gouged about $1,500/ month for health insurance (small company 15 employees so owner didn't have to offer it at all). My wife was self employed at time before she took a new job. Needless to say when it came tax time, I forgot that I gave myself around an $18,000/year raise and it threw us into a new tax bracket. Uncle Sam was smiling when he got my check!
Not sure how your business is set up but why give yourself a pay raise and not just take that money as a distribution?
Did they ask for a history of contributions or conversions? That may be the missing ingredient. You need to convince the software that you withdrew contribution money and not earnings money.
There is also a five year rule on withdrawing conversion money.
This is a good reason to keep a spreadsheet with a list of all roth contribution dates, amounts, and whether it was a contribution or a conversion.
H
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me reading this forum on monitor 2: "yeah, ha ha. yes, procrastinators are crazy funny"
...
meanwhile, TurboTax and about a dozen PDFs are open on monitor 1.
H
Kid blew me off last night to play basketball so we will be coming in hot tonight to get his done. Super easy as 3 W2s and 1 1099.
My wife went from self employed to working for an entity of the state. I just brain farted when I went on her insurance and did nothing to have more taken out of my paycheck to offset the what was no longer taken out of my check for health care.
On a side note, we got back more from the state this year than we ever have and we have usually had to pay in for the last 25 years.
Small clarification here. Bonuses are not taxed at a higher rate, employers just withhold taxes at a higher rate. When you actually file at the end of the year, the bonus is just added to your income and taxed at the applicable bracket for your income level. So that larger bonus withholding just becomes a slightly larger tax refund at the end of the year.
