@Fallout Boy wrote:
My wife took out part of her 401 to pay off her loans. She paid federal taxes of 10% on the early distribution. Why does Turbo Tax say we need to pay more taxes.
She took 50,000 and paid 5,000 in taxes. Why does it state we have to pay an additional 5,000.
The 10% penalty is in *addition* to the normal tax on income. The mandatory 401(k) withholding is 20% so the additional $5,000 tax indicates that probably you are in the 24% tax bracket and should have had more withheld.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
