Withdraw from 401K no penalty, took 22k, received $17,160, my federal tax withheld was 4400 and state was 440. why is my taxable amount still 22k, shouldn't be $17,160?"

I feel like I am paying double taxes when I only received $17,160. Gross distribution was $22K - $4400 (Federal tax) - $440 (State Tax) = $17,160 (received) Box 2a on 1099-R shows $22K, I feel this is not right!

posted

You didn't actually pay the tax. You had taxes withheld like from your paycheck. You still have to enter the whole gross original 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 withholding will show up on 1040 line 16.

You are not being double-taxed. You report the gross amount as taxable income and claim the withheld tax ($4,400 federal and $440 state) as a credit on taxes due when you enter your form 1099-R in TurboTax.

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