My wife and I took some 401k payments this year an...
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michaelangeladye
New Member

My wife and I took some 401k payments this year and it effected my tax payment amount. it was a one time thing why do i have to pay back part of my stimulus?

my actual income didn't change adn we used the money to pay off our mortgage.
2 Replies
Irene2805
Expert Alumni

My wife and I took some 401k payments this year and it effected my tax payment amount. it was a one time thing why do i have to pay back part of my stimulus?

The 401k withdrawals are considered part of your adjusted gross income, even though it was a one-time thing.  Thus, your stimulus payment was adjusted.

 

For additional information, please see the following articles on the IRS website:

Opus 17
Level 15

My wife and I took some 401k payments this year and it effected my tax payment amount. it was a one time thing why do i have to pay back part of my stimulus?

A withdrawal from a 401(k) is always taxable income.  There is also a 10% penalty for early withdrawal if you are under age 55 unless you qualify for an exemption.   Any tax that was withheld is only an estimate, you get credit for that withholding but most people will owe more tax than was withheld.

 

If you can certify the withdrawal was due to a COVID-related hardship, you can be exempted from the 10% penalty, and you have the option of spreading out the income over three years instead of paying all the tax in one year.  This part of the program is not ready yet and probably won't be until late in February, due to IRS delays.  If you want to take advantage, delete your 1099-R forms and wait; re-enter them when the program is updated to cover this situation. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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