Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
New Member
posted Feb 4, 2024 10:53:06 AM

With a early retirement withdraw you add the money to income along with the taxes held out get added to your federal tax withholding correct?

0 2 265
2 Replies
Level 15
Feb 4, 2024 11:00:40 AM

Yes.  You will get a 1099R for it.  

 

You didn’t actually pay the tax or the 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 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 or 5a and the taxable amount on 4b/5b. The withholding will show up on 1040 line 25b.


It has to break out and show the 10% penalty separately on your return (schedule 2 line 8 which goes to 1040 line 23). Then you get credit for all the withholding taken out on 1040 line 25b.


And by increasing your income you may lose some credits like the EIC. You can lose like up to 50% of it for taxes and penalties for federal and state.

Level 15
Feb 4, 2024 11:01:56 AM

You enter your 1099R exactly as it appears.   When the money you took from the retirement account is combined with all of your other income and with all of the other amounts of tax withheld from W-2's etc., the software will calculate your refund or tax due.

 

To enter your retirement income, Go to  Federal> Wages and Income>Retirement Plans and Social Security>IRA  401 k) Pension Plan Withdrawals to enter your 1099R.