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