Hello community, I withdrew from my 401k, I thought I was already taxed+early penalty. Why do i have to pay even more taxes now?

[DoninGA]

Taxes withheld from the distribution are only an estimate of the taxes that will be owed due to the distribution and are entered on the tax return as a tax payment.  The 10% early distribution penalty is assessed on the federal tax return as a tax liability.  The distribution is entered on the tax return as ordinary income.

If your total tax liability is greater then your total tax payments you will have taxes owed on the tax return.

[VolvoGirl]

You didn’t actually pay the tax or the 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 gross 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 Gross amount shows up on 1040 line 4a or 5a and the taxable amount on 4b/5b. The withholding will show up on 1040 line 25b.

It has to break out and show the 10% penalty separately on your return (schedule 2 line 8 which goes to 1040 line 23). Then you get credit for all the withholding taken out on 1040 line 25b.