I withdrew an IRA in 2017 that had been sitting with no contributions for about 2 yrs. At the time of withdrawal, I had them hold 10% tax as advised by the financial institution. When I enter the IRA 1099-R on my taxes form, the tax amount is shown on the form and in turbo tax but turbo tax says I still need to pay 10% tax, which it shows as the same amount I paid. Am I being taxed twice for the same amount? How can I verify that i'm not? Thanks!
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First, if you are under 59 1/2 years of age, there is an early distribution penalty. Since it is also 10%, I can't tell if this applies to you or not. This penalty is in addition to any income tax that you owe on the distribution.
Since the financial institution probably has no idea of your personal tion, the 10% is usually just a guess for withholding - that's why many use 20% instead.
Second, the tax collected on the distribution does not directly pay your tax on the distribution. Instead, it is held by the IRS as a credit against the tax calculated for your return. So the distribution will be taxed independently of any withholding on your return, and at the end of the 1040, the amount of withholding from all sources (1099-R, SSA-1099, W-2, etc) will be applied to the tax.
First, if you are under 59 1/2 years of age, there is an early distribution penalty. Since it is also 10%, I can't tell if this applies to you or not. This penalty is in addition to any income tax that you owe on the distribution.
Since the financial institution probably has no idea of your personal tion, the 10% is usually just a guess for withholding - that's why many use 20% instead.
Second, the tax collected on the distribution does not directly pay your tax on the distribution. Instead, it is held by the IRS as a credit against the tax calculated for your return. So the distribution will be taxed independently of any withholding on your return, and at the end of the 1040, the amount of withholding from all sources (1099-R, SSA-1099, W-2, etc) will be applied to the tax.
Why is there an additional tax on #23 when I put the distribution in another place?
Line 23 on Form 1040 is for an Additional Tax on a distribution.
Look at Schedule 2 to see the type of tax you were assessed. There are a variety of reasons why an Additional Tax may be due.
Click this link for more info on Schedule 2.
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