I am trying to understand the implications of an early 401k withdrawal for mostly education expenses. Say I withdrew $60,000 for education expenses but I had grossed it up $12,000 (20%) to cover income taxes due on the withdrawal for a total of $72,000 withdrawn. Am I allowed to report the $72,000 as education expenses to avoid paying the 10% penalty on both amounts? Otherwise I am paying a 10% penalty or $1,200 which seems wrong. Any advice?
