Cara, who is 42 years old, had some unexpected medical expenses during the year. To pay for these expenses (which were claimed as itemized deductions on her tax return), she received a $10,000 distribution from her traditional IRA (she has only made deductible contributions to the IRA). Assuming her marginal ordinary income tax rate is 22%, what amount of taxes and/or early distribution penalties will Cara be required to pay on this distribution

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Haley Leach

4 December, 08:57

Cara, who is 42 years old, had some unexpected medical expenses during the year. To pay for these expenses (which were claimed as itemized deductions on her tax return), she received a $10,000 distribution from her traditional IRA (she has only made deductible contributions to the IRA). Assuming her marginal ordinary income tax rate is 22%, what amount of taxes and/or early distribution penalties will Cara be required to pay on this distribution

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Ariella Potter · Answer 1

Answer is given below;

Explanation:

Distribution received from IRA $10,000

Marginal income tax rate 22%

Income Tax $10,000*22% $2,200

She will have to pay $2,200 as income tax on her receipt of traditional IRA distribution. There shall be no penalty as she has only made deductible contributions to IRA.