IRA on Income taxes

[nytenant01]

What is the name of your state?NY

My husband and I are looking to take early distrabutions on a roll-over of a simple IRA account. Neither of us are 52 and the original Simple IRA has been active for over 5 years. We are aware that we will be pay a 10% penalty on our distrubutions for early withdrawal. But my questions is what happens as of income tax time? They say that we can pay taxes on it now but how do we know how much state and federal to withhold? And if we do not withhold taxes how do we figure out what taxes we will have to owe on it at the end of the year? We are in a very low tax bracket with 2 children. We usually get a decent refund each year if that makes any diffrence. BUt any advice on this would be greatly appreciated. Thank you for any help in advance!

[abezon]

You can have taxes withheld from the distribution, just like they are withheld from your wages. When you file your return, the distribution is income and you pay income taxes on it, then you add the 10% penalty. Any withholding is simply a credit against the total tax due.

You might consult a local tax pro about why you want the money to see if there are any exceptions to the penalty based on your circumstances.

[nytenant01]

Thank you for the reply. The are going to take the 10% out right away so we don't have to worry about it. I was just wondering also what type of percentage should I withhold for tax purposes if any. Or if it will just balance itself out on return because we are in alow tax bracket. Everyone says to consult my tax prepairer but the only problem is....I do my own taxes! Is there an estame on how much I should withhold for tax purposes? Once again thank you for your help!

[Snipes5]

Keep back an additional 15%.

Snipes

[nytenant01]

Thank you so much. I just want to make sure I am safe come tax season. Again thank you for your help