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    dsem98's Avatar
    dsem98 Posts: 1, Reputation: 1
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    #1

    Mar 7, 2008, 07:14 PM
    Early Withdrawal from IRA
    Hi-

    I have run into some financial problems and need to take money from an IRA. I understand there is a 10% penalty. I am in the 15% tax bracket. How much will I have to pay in federal and NJ State tax. The withdrawal is $25,000.

    Thanks for your help---
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Apr 28, 2008, 12:08 PM
    FOUR WORDS: Do Not Do IT!

    You start with a $2,500 tax which CANNOT be mitigated, which means that even if you have credits and exemptions that bring your tax liability to zero, you STILL have to pay the $2,500 tax that represents the 10% Early Withdrawal Fee.

    Even though you are at 15% now, it is likely the $25K will push you into the 25% tax bracket, though I cannot say by how much.

    You will pay somewhere between $3,750 and $6,250 in federal income taxes.

    PLUS the state of NJ is going to tax that distribution as well.

    In my opinion, it is NOT worth it.
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