I took a distribution from a pension to buy a home overseas. the withdrawal is being counted as income. what can i do to lower the owed federal and state tax.

[carolnancy2002]

I can't afford to pay the additional because i am living on retirement money

[MichaelL1 · Accepted solution]

Very little you can do at this point. I have listed some things to think about. 

If it is a IRA, you can exclude up to $10,000 from an early withdrawal penalty.  

If it is a 401K pension plan you cannot do this.

#1 is to timely file you return (otherwise you will get filing penalties)

#2 pay what you can by April 18th, (this year's deadline) as any amounts you can pay will reduce the failure to pay penalty.

#3 perhaps a home equity loan (probably tough on overseas property) as IRS is expensive place to get a loan from. 

#4 Installment agreement with IRS. 

#5 look over the 2015 return to make sure all deductions on it, if they still apply are on the 2016 return. 

#6 consider a Traditional IRA -however this will cost money you probably don't have.