If I took some money out of of 401k will it put me...
Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
Announcements
TurboTax has you covered during Covid. Get the latest second stimulus info here.
cancel
Showing results for 
Search instead for 
Did you mean: 
New Member

If I took some money out of of 401k will it put me in a higher tax bracket when filing for taxes 2021? I’m pretty basic when it comes to tax returns. Single with no dependents

 
4 Replies
Level 15

If I took some money out of of 401k will it put me in a higher tax bracket when filing for taxes 2021? I’m pretty basic when it comes to tax returns. Single with no dependents

We cannot see any of your information.  We do not know what your tax bracket is, nor do you mention how much you are considering taking out of your retirement account so we do not know if it will change your tax bracket.  

 

If you are under 59 1/2, you will be subject to a 10% early withdrawal penalty plus ordinary income tax in whatever tax bracket you are in.  If you take money out in 2020 you will receive a 1099R in late January/early February which you will need to enter on your 2020 tax return.

 

Here is a link to the tax rates for 2020:

 

https://ttlc.intuit.com/community/tax-topics/help/what-are-the-federal-tax-rates-for-2019/00/1299831

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
Level 15

If I took some money out of of 401k will it put me in a higher tax bracket when filing for taxes 2021? I’m pretty basic when it comes to tax returns. Single with no dependents

Possibly .... but we have a graduated tax system so not all of the extra income will be taxed at the higher rate ... 

 

https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2020

Level 15

If I took some money out of of 401k will it put me in a higher tax bracket when filing for taxes 2021? I’m pretty basic when it comes to tax returns. Single with no dependents

Your tax bracket depends on your taxable income and your filing status.  The amount withdrawn from the 401k is added to your other taxable income which may or may not put you in a higher bracket.  That does not mean all of your income is taxed at the percentage of your total taxable income. 

For example if you have $50,000 of taxable income: the first $9,875 is taxed at 10%.  Then $30,249 is taxed at 12%.  Then $9,876 is taxed at 22%

 

Tax Brackets for tax year 2020 - Single

Tax Rate

10% - 0 to 9,875

12% - 9,876 to 40,125

22% - 40,126 to 85,525

24% - 85,526 to 163,300

32% - 163,301 to 207,350

Level 15

If I took some money out of of 401k will it put me in a higher tax bracket when filing for taxes 2021? I’m pretty basic when it comes to tax returns. Single with no dependents

If you took the money from your 401K for specific coronavirus related reasons, you may not be required to pay the 10% early withdrawal penalty for persons under age 59 1/2. See this for the specific issues that might qualify you to avoid the 10% penalty: https://www.irs.gov/newsroom/coronavirus-related-relief-for-retirement-plans-and-iras-questions-and-...

Dynamic Ads
v
Privacy Settings