I had to take $36,000 out of my 401K for paying off certain debts. Is there a way I can start prepaying the IRS for the taxes I will incur from this on my 2019 taxes? Any advice on how I can soften the blow?
You'll need to sign in or create an account to connect with an expert.
The plan administrator was required to withhold 20% of the amount withdrawn for federal income taxes. You will receive a Form 1099-R in January of 2020 for the withdrawal made in 2019. The 1099-R is entered on your federal tax return and the federal taxes withheld are entered on the return as a tax payment. The taxable amount of the withdrawal is entered on your tax return as ordinary income and taxed at your current tax rate.
If you are not eligible for an exemption to the early withdrawal penalty then a 10% penalty will be assessed on your federal tax return as a tax liability.
See this IRS Tax Topic for early withdrawal penalty exceptions - https://www.irs.gov/taxtopics/tc558
You can use the TurboTax calculator TaxCaster to get an estimate of the taxes owed or a tax refund. Note that the estimator does not include the early withdrawal penalty so if you are required to pay the penalty subtract the penalty amount from any tax refund or add the penalty to any taxes owed - https://turbotax.intuit.com/tax-tools/calculators/taxcaster/
You can pay 2019 estimated taxes on the IRS website at any time as often as needed up through January 15, 2020 using Direct Pay - https://www.irs.gov/payments
Thank you for your response!! I appreciate it.
Still have questions?
Questions are answered within a few hours on average.
Post a Question*Must create login to post
Ask questions and learn more about your taxes and finances.
DoctorWho
Level 5
user17767306802
New Member
msjacky68
New Member
KimberlyNGilliam8866
New Member
normalplus
New Member