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tonjaleemcclella
New Member

I had to take an early withdrawl from my IRA/401K account; How do I figure what the taxes will be. I might owe for the 1st time and I am worried. I live in Wisconsin

 
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TomYoung
Level 13

I had to take an early withdrawl from my IRA/401K account; How do I figure what the taxes will be. I might owe for the 1st time and I am worried. I live in Wisconsin

I assume that Wisconsin taxes withdrawls from IRA's and 401(k)'s in a similar fashion as the federal government does, though at different tax rates, of course.

If you have no "basis" in the IRA/401(k) - most people probably don't - then the entire distribution will be taxed at your highest marginal income tax rate as "ordinary" income.  As a rough approximation you might look at your last year income tax returns and see what tax bracket your taxable income placed you in, (e.g., 10%,15%, etc.) and apply those percentages to the amount of withdrawals.  Of course if your income is markedly higher or lower this year then those tax brackets might not apply; there's just no way to give you a "general" answer here.  You could also use TurboTax's "TaxCaster" calculator - https://turbotax.intuit.com/tax-tools/calculators/taxcaster/ - to get an estimate of the federal tax for the year.

The early withdrawal aspect will then add a 10% penalty for the federal income tax.  It looks like the state of Wisconsin has an early withdrawal penalty of about 3.3%.

Tom Young


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4 Replies
TomYoung
Level 13

I had to take an early withdrawl from my IRA/401K account; How do I figure what the taxes will be. I might owe for the 1st time and I am worried. I live in Wisconsin

I assume that Wisconsin taxes withdrawls from IRA's and 401(k)'s in a similar fashion as the federal government does, though at different tax rates, of course.

If you have no "basis" in the IRA/401(k) - most people probably don't - then the entire distribution will be taxed at your highest marginal income tax rate as "ordinary" income.  As a rough approximation you might look at your last year income tax returns and see what tax bracket your taxable income placed you in, (e.g., 10%,15%, etc.) and apply those percentages to the amount of withdrawals.  Of course if your income is markedly higher or lower this year then those tax brackets might not apply; there's just no way to give you a "general" answer here.  You could also use TurboTax's "TaxCaster" calculator - https://turbotax.intuit.com/tax-tools/calculators/taxcaster/ - to get an estimate of the federal tax for the year.

The early withdrawal aspect will then add a 10% penalty for the federal income tax.  It looks like the state of Wisconsin has an early withdrawal penalty of about 3.3%.

Tom Young


View solution in original post

SweetieJean
Level 15

I had to take an early withdrawl from my IRA/401K account; How do I figure what the taxes will be. I might owe for the 1st time and I am worried. I live in Wisconsin

See Penalties on p 12 here:
<a rel="nofollow" target="_blank" href="https://www.revenue.wi.gov/pubs/pb126.pdf">https://www.revenue.wi.gov/pubs/pb126.pdf</a>
Askkdk
Level 2

I had to take an early withdrawl from my IRA/401K account; How do I figure what the taxes will be. I might owe for the 1st time and I am worried. I live in Wisconsin

isn't covid withdrawal penalties waived? Why is turbo tax stuck at that section in my Wisconsin state file

DaveF1006
Expert Alumni

I had to take an early withdrawl from my IRA/401K account; How do I figure what the taxes will be. I might owe for the 1st time and I am worried. I live in Wisconsin

I have checked this in my Turbo Tax program and it appears that the State of Wisconsin hasn't yet conformed to the COVID federal changes. We do have out engineers that are diligently working on this but at the moment, I don't have an eta when this will be ready. Please view this Turbo Tax link for the latest update.

 

[Edited 03-14-2021|12:17 PM PST]

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