# Accountants: Help me protect my windfall from the IRS!
**URL:** https://boards.straightdope.com/t/accountants-help-me-protect-my-windfall-from-the-irs/669472
**Category:** In My Humble Opinion
**Created:** [September 22, 2013, 9:55pm UTC](https://boards.straightdope.com/t/accountants-help-me-protect-my-windfall-from-the-irs/669472 "2013-09-22T21:55:46Z")
**Posts on this page:** 8
**Page:** 2
### Author:  [@ThelmaLou](https://boards.straightdope.com/u/ThelmaLou)
#### Post date: [September 24, 2013, 8:57pm UTC](https://boards.straightdope.com/t/accountants-help-me-protect-my-windfall-from-the-irs/669472/21 "2013-09-24T20:57:27Z")
> [@RickG](#):
>
> Out of curiosity, why would the IRS take 40% off the top? If your income is that low, I’d think your marginal rate would be 10 or 15%. …
This is what I was wondering.
---
### Author:  [@DrDeth](https://boards.straightdope.com/u/DrDeth)
#### Post date: [September 24, 2013, 10:56pm UTC](https://boards.straightdope.com/t/accountants-help-me-protect-my-windfall-from-the-irs/669472/22 "2013-09-24T22:56:05Z")
> [@AuntiePam](#):
>
> He hasn’t said he has US tax debt though. He owes back real estate taxes (property tax) on his house.
>
> Since he’s benefiting from the Earned Income Tax Credit, it sounds like he has no income tax debt.
Likely not, but what he might have been getting at was trying to get out of paying the taxes on the distribution by declaring bankruptcy.
True, now his marginal tax rate is low. But add $50K to that, and we get into higher rates. Not to mention state taxes and both state and fed penalties, which can add a LOT.
---
### Author:  [@UltraVires](https://boards.straightdope.com/u/UltraVires)
#### Post date: [September 24, 2013, 11:52pm UTC](https://boards.straightdope.com/t/accountants-help-me-protect-my-windfall-from-the-irs/669472/23 "2013-09-24T23:52:49Z")
> [@DrDeth](#):
>
> True, now his marginal tax rate is low. But add $50K to that, and we get into higher rates. Not to mention state taxes and both state and fed penalties, which can add a LOT.
Agreed. That’s why the advice upthread about rolling over into an IRA and (after bankruptcy) take out some this year and some next is good.
---
### Author:  [@dropzone](https://boards.straightdope.com/u/dropzone)
#### Post date: [September 26, 2013, 2:22am UTC](https://boards.straightdope.com/t/accountants-help-me-protect-my-windfall-from-the-irs/669472/24 "2013-09-26T02:22:14Z")
> [@Boyo\_Jim](#):
>
> If he has to count $50K as income, he will surely owe taxes on it. Also, I’ve met dropzone, who’s in the Chicago area, so almost certainly all the tax issues are US or state.
Nope, all property/county. Dupage is 'spensive.
> [@](#):
>
> I don’t know how old dropzone is, so given his stated financial condition I don’t know how practical it would be to roll it over until past age 59.
I’m 59 and 3 months. Some of what they sent me talked about how I wouldn’t get paid until 12/10, the Monday after my half birthday, but I didn’t understand the significance until this thread.
The 40% initial tax bite came from what our mutual Uncle took upfront the last time I cashed in a 401k. Immediately prior to that I had been making three times what I’m making now, so that may have had some bearing on the percentage.
How do I find a lawyer I can trust? The $3500 quote came from the guy the Bar Association suggested.
---
### Author:  [@deltasigma](https://boards.straightdope.com/u/deltasigma)
#### Post date: [September 26, 2013, 2:40am UTC](https://boards.straightdope.com/t/accountants-help-me-protect-my-windfall-from-the-irs/669472/25 "2013-09-26T02:40:00Z")
I don’t think this was mentioned but maybe there was a reason for that. I saw mention of rolling the amount over into a retirement account. That should work and should give access to the money at the same time. You’ll just need to work out the details in advance - assuming people still do this sort of thing.
It used to be common practice that people would borrow against their IRA’s. If you put the money into a retirement account, it should be possible to borrow against it. In theory you’re supposed to pay it back and I guess you could always sue yourself if you don’t, but it might be a way to solve the immediate cash flow problem as well as shake the wolves off your trail.
---
### Author:  [@AuntiePam](https://boards.straightdope.com/u/AuntiePam)
#### Post date: [September 26, 2013, 3:44am UTC](https://boards.straightdope.com/t/accountants-help-me-protect-my-windfall-from-the-irs/669472/26 "2013-09-26T03:44:05Z")
> [@dropzone](#):
>
> How do I find a lawyer I can trust? The $3500 quote came from the guy the Bar Association suggested.
Why a lawyer? Why not an accountant or financial planner? Lawyers use financial planners, just like financial planners use lawyers. Lawyers aren’t financial planning experts.
Or are you looking for a bankruptcy lawyer?
Are you in touch with any of your former co-workers who might also be offered a buyout? The same situation is happening locally, and a couple of accountants are offering free informational seminars to help people decide what to do.
---
### Author:  [@UltraVires](https://boards.straightdope.com/u/UltraVires)
#### Post date: [September 26, 2013, 3:52am UTC](https://boards.straightdope.com/t/accountants-help-me-protect-my-windfall-from-the-irs/669472/27 "2013-09-26T03:52:12Z")
Well, any money you take out before December 10, you might as well take 10% of it and burn it. Plus by taking in out you would expose it to your creditors. I can’t see any circumstance where you would want to cash it out before then. I mean, even if you were starving, I would beg, steal or borrow for food before touching that IRA before December 10 or bankruptcy.
Finding a good lawyer is like finding a good mechanic. Don’t just look in the Yellow Pages. It can be hard depending on how close the community is, but many attorneys do bankruptcies and most cases aren’t that complicated. Any decent one should give you a free consultation and be able to recommend if a 7 or a 13 is your best option. I wouldn’t pay more than $1000 for a 7 (all upfront, of course. The attorney won’t let you pay later only to include HIS bill in your bankruptcy 🙂 ) and as I said, $3000 for a 13 ($1500 up front, $1500 in your plan). Oakminster has better deals in his area and hopefully you can find those.
I would shop around and look for rates in these ranges. Most attorneys should be able to handle personal bankruptcies without too much of an issue. Do you know any small business owners who deal with attorneys or possibly elderly people who have recently written a will? Even if those attorneys don’t do bankruptcies they can point you in the right direction.
Good luck.
---
### Author:  [@UltraVires](https://boards.straightdope.com/u/UltraVires)
#### Post date: [September 26, 2013, 4:12am UTC](https://boards.straightdope.com/t/accountants-help-me-protect-my-windfall-from-the-irs/669472/28 "2013-09-26T04:12:14Z")
> [@dropzone](#):
>
> She’s not the smart daughter, obviously, but he’s willing to pay $1500 for a POS that cost me $1200 and has started to demonstrate its disloyalty–and he doesn’t want me to fix it first! She can have the difference and that $1200 could really help me.
Be sure to do this transfer on the up and up. The bankruptcy trustee will scrutinize the hell out of it because at first blush it looks like a fraudulent transfer to a person close to you so as to liquidate assets in advance of bankruptcy. Definitely mention this to your attorney.
[Previous page](https://boards.straightdope.com/t/accountants-help-me-protect-my-windfall-from-the-irs/669472.md?page=1)