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Returning Member
posted Jun 4, 2019 7:05:25 PM

I took an early withdrawal from a 401K. Can I use medical expenses to reduce the extra taxes on this withdrawal.

I took an early withdrawal on a 401k.  I have pay tax and a penalty on this.  Turbo Tax is trying to reduce this tax for me and is suggesting I enter medical expenses.  I did have high medical expenses in 2017.  Are there any rules for entering these medical expenses.  These would be the same medical expenses I entered on form 1040.

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3 Replies
Level 15
Jun 4, 2019 7:05:26 PM

Only medical expenses that exceed 7.5% of your AGI is an exception to the penalty.

Returning Member
Jun 4, 2019 7:05:28 PM

Thank you.  I know that is what the field say in TT.  What does this mean.  As a test, I entered my medical expenses for the year, $10K, and my taxes owned when down.  Is this legal?

Level 15
Jun 4, 2019 7:05:29 PM

No.  You take your AGI (1040 form line 38) and then 7.5% of that.  Subtract the answer from the medical expense and enter that as the exception.

Example:  Line 38 = $75,000.   75000 X .075 = 5625,   
Medical expenses are $6,600,
6600 - 5625 = 959.

$950 would be an exclusion.