Prepay Taxes

DMahan8581 — Mon, 07 Oct 2019 13:59:35 GMT

I had to take $36,000 out of my 401K for paying off certain debts. Is there a way I can start prepaying the IRS for the taxes I will incur from this on my 2019 taxes? Any advice on how I can soften the blow?

Re: Prepay Taxes

DoninGA — Mon, 07 Oct 2019 14:30:42 GMT

The plan administrator was required to withhold 20% of the amount withdrawn for federal income taxes. You will receive a Form 1099-R in January of 2020 for the withdrawal made in 2019. The 1099-R is entered on your federal tax return and the federal taxes withheld are entered on the return as a tax payment. The taxable amount of the withdrawal is entered on your tax return as ordinary income and taxed at your current tax rate.

If you are not eligible for an exemption to the early withdrawal penalty then a 10% penalty will be assessed on your federal tax return as a tax liability.

See this IRS Tax Topic for early withdrawal penalty exceptions - https://www.irs.gov/taxtopics/tc558

You can use the TurboTax calculator TaxCaster to get an estimate of the taxes owed or a tax refund. Note that the estimator does not include the early withdrawal penalty so if you are required to pay the penalty subtract the penalty amount from any tax refund or add the penalty to any taxes owed - https://turbotax.intuit.com/tax-tools/calculators/taxcaster/

You can pay 2019 estimated taxes on the IRS website at any time as often as needed up through January 15, 2020 using Direct Pay - https://www.irs.gov/payments

Re: Prepay Taxes

DMahan8581 — Tue, 08 Oct 2019 15:28:46 GMT

Thank you for your response!! I appreciate it.

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Prepay Taxes

Re: Prepay Taxes

Re: Prepay Taxes