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Question
Hi,
I was recently displaced from my job and will have severance until May 2010. I currently have some 401k loans and will continue to pay on them until my severance is over. At that time I was told they would be ocnsidered as a distribution if not paid at that time. How would I figure out how much taxes would be owed on it. I calculated I would have a balance of about 12978.00 at that time.
Thank you so much~!
Angela,
You would be subject to a penalty of 10% of the amount of the distribution. Federal taxes would be at your marginal rate, which can vary from 10 to 35% depending on your filing status and taxable income level. In addition, you may be subject to state taxes if your state has an income tax. This would also be at your marginal rate, most likely 4-8%
Hope this helps.
John Stancil, CPA
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John Stancil, CPA
Expertise
I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I teach tax and accounting at a small church-related college. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a part time tax practice for over 35 years. I am a member of the AICPA, National Association of Tax Professionals, and the Institute of Management Accountants. Visit my website at www.johnstancilcpa.com. Also visit my blog, www.thetaxdocspot.com. Prepare and file your own taxes at www.1040stancilcpa.com
Experience
I hold a doctorate in Accounting, and four professional certifications: CPA, CMA, CGMA, and CFM. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 30 years and have taught accounting and tax at the college level for over 30 years.
Organizations
AICPA, FICPA, IMA, NATP
Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly.
Education/Credentials
DBA University of Memphis
MBA University of Georgia
BS in Accounting Mars Hill College
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