topic I took early 401K withdrawal paid taxes and penalties does that affect my taxes? in Retirement tax questions

I took early 401K withdrawal paid taxes and penalties does that affect my taxes?

l-bannister — Mon, 09 Mar 2026 05:22:03 GMT

Re: I took early 401K withdrawal paid taxes and penalties does that affect my taxes?

VolvoGirl — Mon, 21 Feb 2022 20:00:31 GMT

Yes. You only had tax withholding taken out (like from your W2). You need to enter the 1099R to all your income to figure the tax on your total income. Then you will get credit for the withholding.

It may push you into a higher tax bracket. And you can

lose like 50% of it for taxes and the 10% Early Withdrawal Penalty.

Enter a 1099R under

Federal Taxes Tab or Personal (Home & Business)

Wages & Income at the top

Then scroll way down to Retirement Plans and Social Security,

Then IRA, 401(k), Pension Plans (1099R) - click Start or Revisit

There are 4 boxes. Be sure to pick the right box for the kind of 1099R you got.

If you are filing a Joint return be sure to pick which person it is for.

Don't enter the bank or broker name and don't try to import it. It is just as fast and easy to manually enter it. At the bottom pick - Change How I enter my Form

Then on the next screen pick I'll Type it in Myself

Re: I took early 401K withdrawal paid taxes and penalties does that affect my taxes?

DoninGA — Mon, 21 Feb 2022 20:00:43 GMT

You did not pay any penalties for the early withdrawal. You only had federal taxes withheld.

The withdrawal is entered on your tax return as ordinary income and taxed at your current tax return. The early withdrawal penalty is 10% of the amount withdrawn and entered on your tax return as a tax liability. Any federal taxes withheld from the withdrawal is entered on your tax return as a tax payment.

If your total tax payments are greater than your total tax liability you will receive a tax refund for the overpayment. If your total tax payments are less than your total tax liability then you will have taxes owed.