My sole income is an early IRA withdrawal of $9412.66. My Federal deductions total $10,961. I owe $941 for Federal before AND after I enter my deductions. Why?

[buvoir]

Why do my deductions not affect the amount owed?    Do you pay this 10% early reduction penalty regardless of deductions?  I planned it out so that my deductions would cover my penalty thus owing no Federal tax.  

[MiriamF · Accepted solution]

If you took an early withdrawal from an IRA, the IRS levies a 10% penalty on the amount withdrawn, and it is not reduced by itemized deductions.

In fact, your income puts you below the filing requirement, assuming you are filing single and not as a dependent. The filing requirement in that case is $10,350 for 2016. The penalty still applies, however. You can try not filing, but the IRS will probably send you a letter.

For a dependent, the filing requirement is $6300 or more total income, or $1050 in unearned income or $400 in self-employment income.

[buvoir]

Great answer.  Thanks!