I might need to withdraw a large amount of my IRA this year due to COVID 19 issues. WHat are the tax issues involved with making a larger than normal withdrawal this year? Thanks
I can think of few things right off the top of my head - It means that there will be additional tax on the additional RMD amount at the federal level and possibly the state level depending on which state you live in. Also depending on your income, it could kick your Medicare premiums for 2021 to a higher amount. And if you receive Social Security benefits, this money is taxed between 0-85% depending on your income. Of course, if you increase your RMD your taxable Social Security will increase unless you are already at the 85% limit. If you itemize (which many people do not do anymore because of the Trump tax law) and have high medical expenses, it will increase the amount of expenses needed to cross the 7.5% AGI threshold to be able to include medical as part of itemized.
If you already have an accountant, he or she could probably do a quick tax projection for you.
P.S. These are just some random thoughts for you and are not meant to replace the advice of a professional who knows your full tax situation.