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andreasample
New Member

I withdrew my full IRA and spent it on moving and expenses while I am unable to work due to fibromyalgia/severe depression. Am I eligible for reduced tax on this money?

 
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AndreaG
New Member

I withdrew my full IRA and spent it on moving and expenses while I am unable to work due to fibromyalgia/severe depression. Am I eligible for reduced tax on this money?

With respect to the distribution itself. It depends on what type of IRA you withdrew the money from. If this is a distribution from a Traditional IRA then the distribution is part of your taxable income because you generally dont pay taxes on the contribution. If you made any nondeductible contributions, this will reduce the amount that is taxable. Please refer to page 14 of Pub 590B to learn more. https://www.irs.gov/pub/irs-pdf/p590b.pdf

If this distribution is from a Roth IRA then the distribution is NOT part of taxable income if this is a qualified distribution. Please refer to page 30 of Pub 590B for more information. https://www.irs.gov/pub/irs-pdf/p590b.pdf

If part or all of the distribution is part of taxable income, then it is also subject to a 10% penalty tax. However there are some exceptions and the exceptions are the same regardless of whether this is a Traditional IRA or a Roth IRA. Based on your situation, you might qualify for an exception if you paid medical expenses, medical insurance premiums while unemployed, or meet the IRS definition for permanently and totally disabled. Please refer to pages 24-25 of Pub 590B under the headings, "exceptions", "unreimbursed medical expenses", "medical insurance", and "disabled", to learn more. https://www.irs.gov/pub/irs-pdf/p590b.pdf

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AndreaG
New Member

I withdrew my full IRA and spent it on moving and expenses while I am unable to work due to fibromyalgia/severe depression. Am I eligible for reduced tax on this money?

With respect to the distribution itself. It depends on what type of IRA you withdrew the money from. If this is a distribution from a Traditional IRA then the distribution is part of your taxable income because you generally dont pay taxes on the contribution. If you made any nondeductible contributions, this will reduce the amount that is taxable. Please refer to page 14 of Pub 590B to learn more. https://www.irs.gov/pub/irs-pdf/p590b.pdf

If this distribution is from a Roth IRA then the distribution is NOT part of taxable income if this is a qualified distribution. Please refer to page 30 of Pub 590B for more information. https://www.irs.gov/pub/irs-pdf/p590b.pdf

If part or all of the distribution is part of taxable income, then it is also subject to a 10% penalty tax. However there are some exceptions and the exceptions are the same regardless of whether this is a Traditional IRA or a Roth IRA. Based on your situation, you might qualify for an exception if you paid medical expenses, medical insurance premiums while unemployed, or meet the IRS definition for permanently and totally disabled. Please refer to pages 24-25 of Pub 590B under the headings, "exceptions", "unreimbursed medical expenses", "medical insurance", and "disabled", to learn more. https://www.irs.gov/pub/irs-pdf/p590b.pdf

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