Tax question about $10K IRA distribution and $8K homebuyer's credit
February 8, 2010 5:13 PM Subscribe
Is it the $10,000 distribution from my IRA and the $8,000 first-time home buyer's credit that's causing us to owe so much more in taxes this year?
Forgive me for the likely stupid question with not enough background info, but: In 2009 I withdrew $10,000 from my IRA for our first home purchase, and we also received the $8,000 credit for first-time home buyers. Other than that nothing changed for us tax-wise.
We've used TaxAct for the past few years to do our taxes and have always got a refund of ~$2,000 on our federal return and had to pay ~$500 to Califorina. This year we're getting ~$600 from the feds and owe Califorinia ~$2,500.
Before I go pay a hundred bucks to have an actual human look at our taxes, I want to know if this is because that $18,000 is being counted as taxable income and California wants its cut. If it helps, our taxable income is ~$112,000.
Forgive me for the likely stupid question with not enough background info, but: In 2009 I withdrew $10,000 from my IRA for our first home purchase, and we also received the $8,000 credit for first-time home buyers. Other than that nothing changed for us tax-wise.
We've used TaxAct for the past few years to do our taxes and have always got a refund of ~$2,000 on our federal return and had to pay ~$500 to Califorina. This year we're getting ~$600 from the feds and owe Califorinia ~$2,500.
Before I go pay a hundred bucks to have an actual human look at our taxes, I want to know if this is because that $18,000 is being counted as taxable income and California wants its cut. If it helps, our taxable income is ~$112,000.
That marginal $10,000 is costing you $955 in CA State Tax. Add that to the $500 you normally pay, and you should be up around $1450 owed this year. I can't account for the other $1000. Pay the hundred bucks.
posted by Old Geezer at 5:42 PM on February 8, 2010
posted by Old Geezer at 5:42 PM on February 8, 2010
I know almost nothing about the fthbc, but generally a tax credit counts as a payment toward the tax you owe, not at income.
So on the 1040, you add up all your income, including the $10,000, and get your AGI. Then you figure your tax owed on that, lets say it's $10,000. In the next lines, it asks for amounts you have already paid and tax credits. Since you normally get $2000 back, I'm guessing you'd fill in $12,000 from the w-2, and then $8000 from the fthbc, which should mean a refund of $10,000.
I have no idea what California does, but I would find it surprising if they took $3000 of your $8000.
posted by gjc at 6:35 PM on February 8, 2010
So on the 1040, you add up all your income, including the $10,000, and get your AGI. Then you figure your tax owed on that, lets say it's $10,000. In the next lines, it asks for amounts you have already paid and tax credits. Since you normally get $2000 back, I'm guessing you'd fill in $12,000 from the w-2, and then $8000 from the fthbc, which should mean a refund of $10,000.
I have no idea what California does, but I would find it surprising if they took $3000 of your $8000.
posted by gjc at 6:35 PM on February 8, 2010
Shot in the dark -- you said your income is $112,000. The credit starts to phase out at $75,001 for individual filers. You did say "our taxable income" so I'm not sure about your status. If you file jointly, it doesn't start to phase out until $150k.
posted by jckll at 6:50 PM on February 8, 2010
posted by jckll at 6:50 PM on February 8, 2010
This thread is closed to new comments.
posted by garden hoe at 5:33 PM on February 8, 2010