How much taxes should I request to be taken out of an $80,000 pension my deceased mother left for me?

How much taxes should I request to be taken out of an $80,000 pension my deceased mother left for me?

by William L. Stunkel, CPA | Jun 27, 2019

My mother died and left me a piece of her pension (over $80,000). How much taxes should I request to be taken? They are automatically taking 10% of my lump sum. I would rather pay the taxes on this now than later.

An estimate of your tax rate can be calculated using your 2018 tax return – assuming that, aside from the $80,000 pension payment, your other income for the year will be generally the same as in the prior year.  Once you find the amount of taxable income (Line 10 of Form 1040) you had in 2018, add the $80,000 to it. The sum of those amounts can be compared to the IRS expected rates for 2019. The percentage rate that your taxable income will be in should be the rate you use if you wish to ensure you have enough withheld right away when you receive your lump sum distribution.
For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: William L. Stunkel, CPA, is director of small-business services with Holsinger PC in Wexford, Pa.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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