Why, when I have already had fed and state taxes withheld from an IRA distribution is this amount taxable again??
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Taxes withheld from a distribution are an estimate to cover the taxes. They do not represent the actual tax to be charged on the distributions. The actual tax amount is reconciled when you file the tax return. This can result in additional tax due or a refund, depending on the amount of tax withholding selected at the time of the distribution.
You didn't actually pay the tax or 10% penalty (you pay a 10% early withdrawal penalty if you are under 59 ½). You had taxes withheld like from your paycheck. You still have to enter the whole gross original amount (before taxes were withheld) with your other income to figure out the total tax (and it may put you into a higher tax bracket) and then the withholding is subtracted from the total tax to figure your refund or tax due. The gross amount shows up,on 1040 line 4a/4c and the taxable amount on 4b/4d. The withholding will show up on 1040 line 17.
It has to break out and show the 10% penalty separately on your return, (Schedule 2 line 6 which goes to 1040 line 15)
Then you get credit for all the withholding taken out on 1040 line 17.
Thanks so much SusanY1. Seems 22% withholding should have covered the barn, the whole farm for that matter!
K
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