Withdrawn 150000 out retirement account..Paid 22% federal already..Still got pay penalty fees?

[ee-ea]

You paid 22% withholding -- advance deposit towards the future tax as figured on you tax return.  Penalties are another matter.

[dmertz]

Depending on the timing of the distribution, you might need to annualize income on Schedule AI of Form 2210 to reduce or eliminate penalties for underpayment of taxes for earlier tax quarters.

[Opus 17]

It’s unclear what penalty you’re talking about. If you are under age 59 1/2, you probably owe a 10% penalty for early withdrawal. That is calculated on your tax return, and your withholding will not have been enough to cover it.

If TurboTax is calculating a penalty for underpayment of income tax, that may be because you owe more than $1000 at the end of the year, even with the withholding, or it may be because your income came in a single lump sum.  If you are testing your tax situation and you are seeing that you owe more than $1000, you can mitigate any penalties by making an estimated payment before January 15, at www.irs.gov/payments.

you could also be assessed an underpayment penalty because you have a lump sum of income, even though you also had withholding. The basic tax calculations, assume that your income is paid evenly during the year, and that your taxes should also be paid evenly during the year. For example, if you have a $150,000 withdrawal in November, the IRS will still assume that you owed partial estimated tax payments in April, June, and September.  This is addressed by completing the penalty form 2210 and selecting the “annualized“ method. This is a way of dividing your income into the 4 quarters of the year and showing that for each quarter, the withholding or payments was appropriate for that quarter’s income.

[Critter-3 · Accepted solution]

If you had to pay a 10% penalty + fed taxes at your tax rate then the 22% withholding would not have been enough.  For instance ...if you had no other income, filing single with no dependents and using the standard deduction  then your estimated tax bill would be about 26,488 federal + 15,000 (10% penalty) = 41,488 - 33,000 withheld = 8,488 owed on the tax return ... you did not have enough withheld. 

[kramster4]

Ok great information thanks..This is what I got ..I claim married filing joint with working spouse with house hold income 100,000 possibly little more but 100g range. So actually 152,000 401k closed account took it out..22% I paid taxes off top so what I owe.I claim a house interest..1 child also...Reason i cashed out homeowners in new Orleans area ridiculous going up and house note double saddd..Thanks again

[kramster4]

Forgot to add on my w2s I claim married filing joint standard deduction least amount taken nothing extra coming out.