Tax on early retirement

czfaulkner · ‎June 5, 2019

Why is it that I am being taxed twice by taking a lump sum out of my retirement?

DoninGA · ‎June 5, 2019

You are not being taxed twice. The withdrawal from your retirement account reported on a Form 1099-R is entered on your tax return as ordinary income and taxed at your current tax rate. Any taxes withheld from the distribution is entered on the tax return as a tax payment (just like from a W-2). If you were under the age of 59 1/2 at the time of the withdrawal there will be a 10% early withdrawal penalty assessed on the Form 1040 and entered on Line 59 as a tax liability. If your total tax payments are greater than your total tax liabilities you will receive a tax refund for the overpayment. If your total tax payments are less than your total tax liabilities then you will have taxes owed.

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DoninGA · ‎June 5, 2019

You are not being taxed twice. The withdrawal from your retirement account reported on a Form 1099-R is entered on your tax return as ordinary income and taxed at your current tax rate. Any taxes withheld from the distribution is entered on the tax return as a tax payment (just like from a W-2). If you were under the age of 59 1/2 at the time of the withdrawal there will be a 10% early withdrawal penalty assessed on the Form 1040 and entered on Line 59 as a tax liability. If your total tax payments are greater than your total tax liabilities you will receive a tax refund for the overpayment. If your total tax payments are less than your total tax liabilities then you will have taxes owed.