The Tax Questions Blog

Archive for March, 2008

Question: I need to take a distribution from my 401K. What can I expect as tax & penalty?

I need to take a distribution from my 401K due to a financial emergency (unemployment) and need to understand what i will owe the IRS out of that money. I know there is the 10% penalty (can that be waived if one has had to endure unemployment hardship?) and a tax amount. Is the tax going to be per my individual tax rate for is it a fixed amount?

Answer: The tax is whatever your bracket is including the distribution as income, and sorry but no the penalty can't be waived.

Top 9 benefits of a 403(b) plan

Find out how the 403(b) plan helps employees of nonprofit entities meet their retirement goals.

IRS Notice of Deficiency scam fraudulent default of 1862

Question: person X died and his wife received a gratuity (rs7.5 lac). to whose income will this be added - X or his wife

gratuity upto rs 3.5 lac is tax free. beyond this it is taxable. in this case please advise which section of income tax should be referred.

Answer: [Section 10(10)] of income tax allows Exemption of Rs. 3.5 lacs.

The excess sum will be taxable in the hands of HUSBAND only. Now, as husband has died, the tax will be computed as if the husband is alive but the tax will be paid by his wife.

The Hindu Business Line : Higher gratuity limit from May 24

Employees covered under the gratuity law are now eligible to receive gratuity of up to Rs 10 lakh, as against an earlier specified statutory limit of Rs 3.5 lakh.

Question: Has anyone with s.s ending 76 through 99 have any luck on the IRS rebate tool where my refund with DD?

I Have Direct Deposit and ss ends with 93 and no luck

Answer: Thanks for asking this question, as I was wondering the same thing. Mine ends in 94 and it doesn't show any info and I know I should be getting mine direct deposit.. Can someone post if anything changes?? Thanks

Louisiana US Senate Race: Vitter, Stormy Daniels, Melancon, Anyone Else?

After Bayoubuzz published an article about former Louisiana Senator James David Cain possibly running for US Senate race, we received emails claiming we made the story up or that it was a non-story.

water4gas - Save Money, Burn Clean Air, Get IRS Rebate

Married couples who are separating generally ask two most common questions frequently. These questions are "How much child support will I have to pay?" and "How much child support will I receive?" In order to help answer these questions, the Florida child support calculator was created. However, one should remember that these calculators are only for information and educational purposes only.

This is because the amount of the child support, a judge may order for a particular case of separation or divorce may be different from the amount that may be estimated by the calculator. Generally, while using these calculators, it is assumed that all the dependent children will primarily live with only one parent. If there is a joint physical custody or split custody of the children, then the help of the calculator cannot be taken. Also these calculators do not take into account any adjustments that may be possible for the children who are not subject to the custody order, but are living with one of the parent's all the same.

Therefore all these factors as well as others may totally affect a child support order issued by a court. So for most of the time these calculators will assume that all the children shall primarily and actually stay and live with only one parent. As a matter of fact, calculation of child support in Florida is always based on the income of both the parents. Expenses that have been made or may be made in future, do not affect the calculation of the support amount. However, exceptions are made, when there are reductions based on other children you support, medical expenses of the concerned party who has to make the payment and other expenses that are made, or to be made under extraordinary circumstances.

With these exceptions, you are bound to pay the amount that has been calculated as per the standard Florida guidelines. While assuming the income that will be used to calculate the payment of the child support by the Florida child support calculator, the amount of income that will remain after taking out the alimony amount, will be taken into account.

Therefore alimony payments made will also reduce the amount of child support.

While calculating the income, only the income of the parents is taken for calculating purposes. Child support can also be modified to an extent. This happens whenever the income changes. In such cases the child support has to be recalculated and modified accordingly.

In accordance to the rules, you are allowed to file for a modification, whenever child support would change by $50 or by 15%. For using the calculator, you have to press the calculator tab and then calculate how much basic child support will be for each parent.

While calculating the child support, the court has to take many factors into consideration, for example:

Taxing fears on a primary residence

Do some hard maths and minimise your government obligations, writes George Cochrane.

Question: What is the inheritance tax rate in California for a beneficiary?

My uncle passed away about a year ago and I was on of his beneficiaries of his E-Trade stocks...what % would I be taxed on the payout of those stocks...e.g. If I received 200k, what % of that would be taxable and how much would I owe in taxes?

Answer: There is no Inheritance Tax on the stock inherited by the beneficiary in the state of California. The value of the stock on the day that your Uncle passed away becomes the beneficiary's "basis cost" for the stock. If the stock cost $10.00 per share when your Uncle bought it then his basis cost was $10.00. If the stock was worth $100.00 per share on the day that your Uncle passed away then your basis cost for the stock is now $100.00 per share, not the $10.00 basis that your Uncle had. You have received a "stepped up" basis. When you sell the stocks, you will owe Capital Gains Tax on any amount that you receive if the stock sells for more than $100.00 per share. For example, if you sell the stock for $120.00 per share then you will owe tax on the $20.00 per share that the stock has appreciated or gained. In this example, since the Capital Gains Tax is 15% in 2008, you would owe $3.00 per share sold.

Same-sex couples must create legal patchwork to protect assets, relationship

Charles Townsend thought he’d covered his financial bases with a joint trust he created with his long-time partner 10 years ago. Then a neighbor told Townsend about the six-figure check the neighbor had written to the IRS to pay the estate taxes on the home shared with his partner.

Michael Barone