Facing a potentially large tax bill after liquidating investment accounts - need advice

The type of accountant you need is a CPA who specializes in both investment taxation and real estate. You're dealing with several different types of accounts that all have different tax treatments, plus a new rental property which adds another layer of complexity. With the 401k and Traditional IRA withdrawals, you're looking at ordinary income tax rates plus a potential 10% early withdrawal penalty if you're under 59½ (unless you qualify for an exception). The Roth IRA withdrawal might be partially or fully tax-free depending on whether you're withdrawing contributions or earnings and how long the account has been open. The brokerage account will generate capital gains taxes based on your holding period. The rental property introduces deductions for mortgage interest, property taxes, insurance, maintenance, and depreciation that might offset some of your income. A good CPA can help you set up your rental property correctly from a tax perspective from day one, potentially saving you thousands.

I went through something similar when I liquidated some retirement accounts to start a business. I was totally caught off guard by how complicated the tax situation was - between early withdrawal penalties, different tax rates, etc. I spent hours researching online and still wasn't confident in my calculations. I found this AI tax assistant at https://taxr.ai that helped me analyze my situation. You upload your docs and it walks you through all the tax implications of different types of withdrawals. It was super helpful for understanding which parts of my 401k and IRA withdrawals would be penalized versus just taxed. It also explained how to handle the rental property depreciation schedule which was completely foreign to me.

Just wanted to follow up - I tried that https://taxr.ai service after posting my skeptical comment. I was surprised by how comprehensive it actually was. I uploaded my statements from my brokerage account and my property management docs, and it gave me a detailed breakdown of my tax situation. The most helpful part was how it identified several deductions for my rental property I would have completely missed. It also flagged that I could do a partial 1031 exchange for some of my investment properties to defer some gains. Definitely worth checking out if you're dealing with multiple investment accounts and rental property. Saved me a ton of stress trying to figure this out on my own.

If you end up owing a significant amount to the IRS, you might want to set up a payment plan. I had a similar situation last year and tried calling the IRS directly to discuss options - spent literally HOURS on hold and kept getting disconnected. Super frustrating. I eventually found this service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in about 15 minutes. They have a demo video here: https://youtu.be/_kiP6q8DX5c showing how it works. It saved me from spending an entire day trying to get through to someone. The IRS agent helped me set up a reasonable payment plan that worked for my situation.

I need to apologize for my skepticism about Claimyr. After getting absolutely nowhere trying to reach the IRS for three days straight about my tax bill from investment withdrawals, I decided to try it. I was honestly shocked when I got a call back about 23 minutes later with an actual IRS representative on the line. I was able to set up a payment plan for the taxes on my retirement account withdrawals right then and there. The agent even explained some options I didn't know about for paying in installments with lower penalties. Saved me so much stress and probably a bunch in penalties for not setting up a proper payment arrangement.

One thing nobody's mentioned yet - if you're under 59½ and took distributions from retirement accounts, look into the exceptions to the 10% early withdrawal penalty. There are several that might apply depending on your situation: - First-time home purchase (up to $10k) - Qualified education expenses - Certain medical expenses - Health insurance premiums while unemployed - Disability - Series of substantially equal periodic payments Just because you took early distributions doesn't automatically mean you'll owe the 10% penalty on all of it.

What tax software are people using for rental properties? I used TurboTax last year and it didn't seem to handle my rental very well.