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posted Apr 15, 2024 3:29:36 AM

Penalized for early deductions in wrong year.

I made early withdraws from my retirement accounts in 2024. There was a question on my return asking if I made returns between January 1, 2024 and the April 15th due date. When I entered the amounts, my refund went down by 300 dollars. I thought I wasn't supposed to pay the penalties until next years 2024 taxes? Why is my refund lower?

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1 Replies
Level 15
Apr 15, 2024 4:42:55 AM

Because you took money out of your retirement account in early 2024, this has caused a reduction in the amount of Retirement Savings Contributions Credit you are eligible to receive.  This is an anti-abuse provision in the tax code to prevent people from using money from a retirement account to make a new retirement contribution to obtain this credit and not actually increasing their retirement savings.