Withdraw of 1099-R due to hardship $1,922.44 When it asks why,I put other reason and then it didn't reduce the refund. So do I have to pay the taxes or is this correct?

[DoninGA]

Yes, the withdrawal is added to your other income and taxed at your current tax rate.  If you were not eligible for an exception to the early withdrawal penalty then the 10% penalty will be assessed on your tax return Form 1040 Line 59 as a tax liability.

[VolvoGirl]

Did they take withholding out of it?  You didn't actually pay the tax or 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 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 64 or 1040A line 40.  The 10% penalty is on 1040 line 59.

[justme76-]

No they didn't take anything out. I thought I would have to pay taxes, but it asked for a reason why I cashed it out. I clicked on other reason and it put all the refund back. I just don't know if hardship is an approved cash out.

[Opus 17 · Accepted solution]

"Hardship" is the only way to get money out of a 401(k) or 403(b) while you still work for the employer, but it doesn't excuse you from either the income tax or the 10% penalty if you are under age 59-1/2.

If this was a private IRA, then you can money out without proving a hardship, but the money is still subject to income tax and penalties.