$*******$

Scenario $2$: Disability Exception

Sarah retired at age $48$ due to a permanent and total disability. She took a $$28,000$ distribution from her Traditional IRA.

Wages: $$0($receives disability income, not taxable$)$

Interest and Dividend Income: $$1,200$

Itemized Deductions: $$9,000$

Allowable deduction for self$-$employment tax: None

Calculate:

The portion of the distribution subject to the $10\%$ early withdrawal penalty.

AGI, Taxable Income, and Total Tax Liability.