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anametza
New Member

My husband cashed out stock and received a 1099R. He paid taxes on it but now when filing, it states we have to pay additional tax. Why is this?

 
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1 Reply
SusanY1
Expert Alumni

My husband cashed out stock and received a 1099R. He paid taxes on it but now when filing, it states we have to pay additional tax. Why is this?

The taxes collected at the time the payment is made are estimates of what is owed; they do not always cover the full balance.  When you prepare your tax return at the end of the year, you reconcile your taxes owed on all income, not just the income on that single transaction.

 

The tax balance you owe takes into consideration all of your income, deductions, and taxes paid. 

 

If the 1099-R distribution was from a retirement account and the distribution was prior to age 59 1/2, the most common withholding mistake is that only the amount necessary to cover the 10% penalty is withheld by the payor, and not the amount also needed to include the income tax.  However, without being able to see the information, I can't say with certainty what may have happened in your specific case.  

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