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There is no 10% early withdrawal penalty for COVID withdrawal but the distribution is taxable. You can choose to split your taxable amount of your distribution over a three-year period though because of COVID 19.
Looks like I will owe for the state of PA. How is that so?
According to the PA Dept of Revenue website, The Federal provisions [of the CARES Act distribution on retirement accounts] are not applicable to PA.
The website states as follows:
PA doesn’t tax distributions from “old age or retirement benefit plans” if the distribution is made after retirement upon reaching age or years of service requirements. Early distributions from retirement accounts are subject to tax to the extent that they were not already subject to tax at the time the money was contributed to the account.
It appears that although the IRS allows you to split the taxable amount of the early distribution over three years, the state of PA wants it all upfront. This could be the reason why you owe the State of PA.
I am confused... I did the 10 percent withholding for federal, do I get that back then.. Sorry taxes are definitely not my strong point
Tax withheld will add to all withholding and increase your refund (or reduce tax owed).
I really do not get it... I made 42K paid 4.2k in federal taxes. I took out 4900 due to covid and 10 percent was withheld 490 dollars and I am only getting 600 dollars back... What am I doing wrong.
@Matt 126 wrote:
I really do not get it... I made 42K paid 4.2k in federal taxes. I took out 4900 due to covid and 10 percent was withheld 490 dollars and I am only getting 600 dollars back... What am I doing wrong.
Your refund depends on ALL of your taxable income on the 1040 form.
Withholding is on the 1040 form line 25 that pays the tax that is on line 24. What is left over is added to your refund.
Look at the 1040 form lines 24 to the end.
So how do we get the 10 percent back that was paid!?
The 1099-R box 4 amount will go on line 25 and be applied to pay the tax owed or add to your refund just like any other withholding - you do not lose it.
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