1905206
I just withdrew a total of $104,772.95 from my NEW YORK LIFE PREMIER PLUS II IRA (includes $4,772.95 surrender charge to net $100,000). Of that amount, $64,799.19 is for tuition and other authorized expenses for my MBA (not including travel, meals and lodging per the IRS website). So, that amount is not taxable, but the remaining $39,973.76 is. I know I'll receive a 1099 for my 2021 taxes, but how do I let the IRS know that I should only be taxed for the remaining balance? Can I pre-pay state (5%) and federal (10%) taxes and submit that? Thanks for any assistance.
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Your distribution is fully taxable. Your can ask your IRA administrator to withhold federal and state taxes so that you do not have a large tax bill at tax rate (and possibly an underpayment penalty).
If you are aged under 59 1/2, only the early withdrawal penalty of 10% is waived on the portion used for higher education.
In fact, if you have qualified education expenses, your early IRA distribution is exempted from the 10% penalty up to the amount of these expenses.
Please read this TurboTax Help topic.
In TurboTax, to obtain the exemption please follow these steps:
Thank you very much, I think I confused the tax penalty relief for education as non-taxable. Makes perfect sense no, so thank you!
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