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bdworks87
New Member

401K withdrawal as a dependent

Hi, i have a question pertaining to a 401k withdrawal. I would like to know how cashing out my 401k can/will affect my fiancé’s taxes as he claims me as a dependent? Can he still claim me? Will he have to claim my 401k cash out as his income? Will i have to file an individual tax form instead?
1 Best answer

Accepted Solutions
DoninGA
Level 15

401K withdrawal as a dependent

If you have gross income of $4,050 or more in 2017 and are not a full time student under the age of 24 then no one can claim you as a dependent.  

The 401(k) withdrawal would be entered as ordinary income and is only reported on your tax return, taxed at your current tax rate.  If you were under the age of 59 1/2 or under the age of 55 and not separated from the company holding the retirement account then there will be a 10% early withdrawal penalty assessed on your tax return reported as a tax liability.

You will receive a Form 1099-R in January of the year following the withdrawal.  The Form 1099-R is reported on your tax return.

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4 Replies
DoninGA
Level 15

401K withdrawal as a dependent

If you have gross income of $4,050 or more in 2017 and are not a full time student under the age of 24 then no one can claim you as a dependent.  

The 401(k) withdrawal would be entered as ordinary income and is only reported on your tax return, taxed at your current tax rate.  If you were under the age of 59 1/2 or under the age of 55 and not separated from the company holding the retirement account then there will be a 10% early withdrawal penalty assessed on your tax return reported as a tax liability.

You will receive a Form 1099-R in January of the year following the withdrawal.  The Form 1099-R is reported on your tax return.

Thelordhathcome
New Member

401K withdrawal as a dependent

So what happens if you have $0.00 in income for the full year, outside the 401k cash out, but the 401k cash out would be over the $4050.00 income amount as a dependent.

 

Does this now put you unable to be claimed as a dependent? Or would you be claimable as a dependent and just have to pay the penalties and the taxes on the money withdrew.

VolvoGirl
Level 15

401K withdrawal as a dependent

If you have over $4,150 income (for 2018  I think it's 4,200 for 2019) THEN nobody can claim you as a dependent.  When you file your own return you will claim yourself.  They can not claim you.  

 

And by the way, if you are under 59 1/2 there is a 10% Early Withdrawal Penalty on 401K and IRA withdrawals.

VolvoGirl
Level 15

401K withdrawal as a dependent

Oh but your parent can still claim you if you are under 24 and a full time student no matter how much income you have.

 

Rules to claim a dependent

https://turbotax.intuit.com/tax-tips/family/rules-for-claiming-a-dependent-on-your-tax-return/

 

And see, Who can I claim as a dependent? 

https://ttlc.intuit.com/community/credits-and-deductions/help/who-can-i-claim-as-my-dependent/00/267...

 

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