We had federal tax and the early withdrawl penalty taking out of my IRA distribution but our refund still went way down? We don't understand why?

[Critter]

The best way to see what happened is to review the return with and without the pension distribution ... but a couple guesses are :

> you may have had 20% withheld however the amount pushed you info a higher tax bracket ... like if you are in the 22% bracket + 10% penalty you needed 32% withheld so you are 12% short

> it could have affected several credits

[dawndhartley37]

Hi thanks for your feedback! I actually looked at it again with a fresh pair of eyes this morning and realized that what reduced our refund was that once I put the IRA in it reduced the amount of earned income credit we are receiving. It went from $1663 down to $406 so that is why.