BELLADOG1
New Member

Why do I have to pay taxes on a retirement distribution that already withheld taxes?

 

Retirement tax questions

You didn't actually pay the tax or 10% penalty (you pay a 10% early withdrawal penalty if you are under 59 ½).  You had taxes withheld like from your paycheck. You still have to enter the whole amount (before taxes were withheld) with your other income to figure out the total tax (and it may put you into a higher tax bracket)  and then the withholding is subtracted from the total tax to figure your refund or tax due.  The withholding will show up on 1040 line 64 or 1040A line 40.  The 10% penalty is on 1040 line 59.

It has to break out and show the 10% penalty separately on your return and then you get credit for all the withholding taken out on Line 64.

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Retirement tax questions

Let's play semantic games. You did actually pay those taxes. That's why it is called Over-pay-ment when you get some of that back.

You are not paying twice. You are computing your total tax. And reporting the final result on the Form 1040.