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Comments made by lauroge

Last Minute Tax Tips

Hi Raphael:
Thanks for the help. I owe $3,100 in taxes for 2010. My income was only from unemployment (I haven't worked for 1.5 years) and from early withdrawal of 401K money for living expenses. Is there a way to figure out if I should take another early withdrawal from 401K to pay taxes or set up installment plan with IRS?

The installment plan rate is .025% mthly on principal and fully decreases principal each month. I can afford to pay installments over 3-5 years with a small fee of $52 up front.

For 401K withdrawal: My tax rate was about 13% + 10% penalty, so I think it will cost me about $713 to pay the $3100 bill by doing another early withdrawal (of course, then I have to pay tax on the $713, too!)

Is there a formula or logical way to figure out which cost less in the long run?

April 18, 2011 at 12:06 p.m. ( | suggest removal )