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New Member
posted Apr 17, 2023 3:54:58 PM

I took a hardship out on my 401 k for purchase of home . Why would I owe more taxes again? I had them take all the taxes out right then?

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2 Replies
Level 15
Apr 17, 2023 3:57:53 PM

Taking money out of a 401k  for a down payment is not an exception to the 10% early withdrawal penalty.  That exception only applies to taking money from a traditional IRA.  So you are subject to the 10% penalty if you are younger than 59 1/2 as well as ordinary tax.  The amount withheld was only an estimate,  which must be reconciled with your other income and other withholding amounts.

Level 15
Apr 17, 2023 4:01:24 PM

The federal taxes withheld is only an estimate.  There is not a exception to the early withdrawal penalty when using a 401(k) for a new home purchase.  Only from an IRA.

There is no exception for a hardship withdrawal.

The federal taxes withheld will be entered on your tax return as a tax payment on your Form 1040 Line 25b.  The taxable amount of the distribution will be entered on your tax return as ordinary income.

 

To enter, edit or delete a form 1099-R -

Click on Federal Taxes (Personal using Home and Business)
Click on Wages and Income (Personal Income using Home and Business)
Click on I'll choose what I work on (if shown)
Scroll down to Retirement Plans and Social Security
On IRA, 401(k), Pension Plan Withdrawals (1099-R), click the start or update button

 

Or enter 1099-r in the Search box located in the upper right of the program screen. Click on Jump to 1099-R