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No penalty for 1099R
When filing our 2020 taxes it took the "total" amount of what we withdrew from my 104K and added it to my overall annual income which jumped it up into another tax bracket. Is that correct and I'd have to make an amended return later or should it not count from the start?
Thanks,
Brad
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Deductions & credits
Yes a 401K is taxable unless it was a ROTH 401K Account. 401K contributions come out of your wages pretax and aren't taxed until you take it out.
If you take a Withdrawal it is taxable on your return and may push you into a higher tax bracket and more income can reduce or eliminate some credits you may qualify for and may make more of any Social Security or SSDI taxable. So be careful. Then there is a 10% Early Withdrawal Penalty if you are under 59 1/2 or under 55 if you left that job. You can lose like up to 50% of it for taxes and penalties for federal and state.
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Afternoon,
I wasn't detailed enough. This available under the Covid relief act that said you could deduct with only a 10% penalty when it was withdrawn. Or either way is it always considered income?
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You have that backwards ... the total distribution was subject to taxes at your current rate ... it was only the 10% penalty that was waived.