Retirement withdrawal used for home purchase

[mcchirillo]

I withdrew my 401K, paid taxes on it at the time of withdrawal, and used the rest to buy a home.  I am getting nailed for a lot more taxes now.  Can the fact that I used the money for a home purchase somehow lower my tax burden this year?  Thank you!

[Zbucklyo · Accepted solution]

Since the withdrawal was from a 401 (k), no exception to the 10% penalty on an early withdrawal for a first time home purchase applies.  Sorry.

[mcchirillo]

I escaped the 10% penalty due to turning 55 the year I left my job.  Just wondering about the taxes taken out at the time of the withdrawal, and now even more are due.

[Zbucklyo]

Think of the withholding on the withdrawal as an estimate of the taxes owed from the withdrawal.  It is very similar to withholding on a paycheck.  When you file your taxes, the actual amount due from the withdrawal is calculated (in conjunction with other income, deductions, etc.) and you are given credit for the withholding, which all figures into your final tax liability.

[denise2128]

Sorry, I guess I should have said I am over the age for the 10% penalty.