Tax consequences of liquidating an ira dating bradford to be released
On Line 15b, report the ,000 taxable portion and on Line 15a, report the entire ,000 liquidation.Complete Form 5329, Part I, to figure the additional tax penalty of the liquidation.
However, if you've made nondeductible contributions to your traditional IRA, those aren't taxed when you withdraw them.For Roth IRAs, your account has to be at least five tax years old and you have to be either 59 1/2, permanently disabled, or using no more than ,000 to buy your first home.Actually liquidating the account is relatively simple, but the tax reporting is more complicated.No income tax will be required during the distribution. According to IRS Publication 590B, the taxable part of your IRA distribution gets included in your taxable income for the year — in other words, it's taxed at your regular income tax rate, depending on your tax bracket.For example, if you fall in the 12 percent tax bracket, a ,000 taxable distribution costs you 0.
If you find yourself in desperate financial straits, however, you can withdraw the money early, but you'll face income taxes and extra tax penalties.