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posted Jun 3, 2019 11:45:36 AM

My 1099R indicates that I had Federal Taxes withheld from my early 401K disbursement but TurboTax is indicating I still owe 10% of the disbursement. How can I fix this?

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1 Replies
Level 15
Jun 3, 2019 11:45:37 AM

You didn't actually pay the tax or 10% penalty (you pay a 10% early withdrawal penalty if you are under 59 ½).  You had taxes withheld like from your paycheck. You still have to enter the whole amount (before taxes were withheld) with your other income to figure out the total tax (and it may put you into a higher tax bracket)  and then the withholding is subtracted from the total tax to figure your refund or tax due.  

It has to break out and list the 10% early withdrawal penalty separately on your return.

And it's very very common to owe more because the withdrawals increase your income and put you into a higher tax bracket.
So when you add all your income for year you didn't have enough withholding taken out of the 1099Rs to cover the total tax. You owe more than they sent in for taxes.  That's very common to owe more because the withdrawals increase your income and put you into a higher tax bracket.

And by increasing your income it would have changed other items on your return like make more of your SS taxable or changed the limits on your Medical deductions or employee job expenses and changed any credits you qualified for.