Well I made a rookie mistake. After saving for such a long time wanted to reward ourselves with some toys. The market had been good so took money out of the retirement account to pay cash for the toys. Needless to say the 20% federal withholding didn't quite cover it. Don't have anymore toys on the list but will know better next time.
Huge tax bill
- Thread starter Chief322
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FANOFJESUS
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How big?
REWahoo
Give me a museum and I'll fill it. (Picasso) Give
Kudos for posting about your experience. Most would not have the courage to own up to how painful the tax bill can be for withdrawing from their IRA prior to 59.5.
Hopefully your experience will save others from suffering similar financial pain.
REWahoo
Give me a museum and I'll fill it. (Picasso) Give
So in retrospect, which toys would you have foregone in order not to make this mistake?
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I'm trying to make sense of the OP... even if one had ~$170k of all ordinary income then the tax would be less than 20% of income after deductions and exclusions (for a couple) .... unless the OP was in a high tax bracket to begin with before the withdrawals or was subject to 10% penalty. Must be some really nice toys.
But nonetheless a good lesson to do some rough calculations of taxes before doing large withdrawals.
ETA: I missed the post by the OP that they had other income that put them in the 33% bracket.... ouch! Lesson learned I guess.
But nonetheless a good lesson to do some rough calculations of taxes before doing large withdrawals.
ETA: I missed the post by the OP that they had other income that put them in the 33% bracket.... ouch! Lesson learned I guess.
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VanWinkle
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Tax caster is your friend for determining how withdrawals will affect your tax brkt.
https://turbotax.intuit.com/tax-tools/calculators/taxcaster/
I do taxes, and many people make the same mistake. In some cases, the withdrawal takes them over the ACA cliff and it really gets ugly.
Sorry it happened to the OP, but sounds like he learned a lesson from it.
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Taxcaster is good, but the What-If worksheet in TT is good as well and allows easy comparison between different years or different scenarios.
VanWinkle
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copyright1997reloaded
Thinks s/he gets paid by the post
OP, I will make you feel better (in terms of I feel your pain). I haven't done my 2017 taxes yet, but have a $149,000 capital gain from a single security. My largest holding was the subject of a mostly cash takeover. Think that's gonna hurt when I do my taxes?
audreyh1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I am expecting a 6 figure tax bill. And maybe only 2/3 of it has been paid in estimated taxes.
So that's going to be a big hit come April.
But it's not a surprise. I deliberately sold some long-held assets last year.
So that's going to be a big hit come April.
But it's not a surprise. I deliberately sold some long-held assets last year.
That's one way to Blow More Dough!
SnowBound
Recycles dryer sheets
Be glad: The market is up. Just think how painful the experience would have been if the market was down!
FANOFJESUS
Thinks s/he gets paid by the post
I thought I got hit hard at 3k
JPatrick
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I have several of those monster cap gains stocks, and I've pretty well decided they are going into the will.
My plan too but sometimes the plans get upset by a taxable spinoff/merger that derails the plan.
copyright1997reloaded
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Ha, that was my plan too. Oh well. While I was real happy to get a 25% uplift in price in one day (when the takeover offer was announced), I would have much rather gotten all/mostly ADI stock instead of mostly cash...especially since ADI has continued to move upwards. (At least I own some of it.)
Having said that, it certainly is a 'good' problem to have.
gauss
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Yep -- plans some of that too - especially for funds in retirement accounts.
In the meantime, donations to charity are almost always facilitated by appreciated after-tax investments.
Donor Advised Funds such as Fidelity Charitable make this particularly easy to put in to practice.
-gauss
COcheesehead
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
5 figure tax bill here and I didn’t even get any toys
COcheesehead
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Yep, almost all my donations now come from my Fidelity Charitable account. Too many benefits not to do it this way.
frayne
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Ouch, did you get dinged with the 10% penalty too ?
Guess I'm not going to bitch about my lousy $1500 fed. tax bill this year.
