Normal IRA Withdrawl inTurbo Tax

[sd3534]

I am planning to take out some money from my IRA which is not a Roth account and I am over 59.5.

Is it safe to assume, Turbo Tax has a place for that to account for the extra taxes?

The 401k account I have with my employer will take 20% right away from the amount I take out how does the tax taken and the amount received get accounted for in Turbo Tax?

[Critter-3]

All you have to do is enter the 1099-R that is issued to you next January and the program will add it to your total income and the withholdings to your total payments.  There are no "extra" taxes since you are over the age of 59.5.

[johnd84]

Thanks for your question! 

Yes TurboTax will account for this. You will receive a form 1099R on the distribution. You'll enter this information in TurboTax under Income>Retirement Plans. You'll see the 1099R mentioned. There is a box to enter the distribution amount and a box for you to enter the tax that was already withheld. The tax for this distribution is based off everything else that goes into your return and you will get credit for the amount that was already withheld. Thanks again! 

[sd3534]

Thanks very much for the help!

[VolvoGirl]

The 20% taken out is not the actual tax.  You have taxes withheld like from your paycheck. You will 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 gross amount shows up on 1040 line 4a or 5a and the taxable amount on 4b or 5b.  The withholding will show up on 1040 line 25b.

[sd3534]

VolvoGirl:

If the 20% is not the taxes what is it?

[VolvoGirl]

It is just an Estimated amount.  It is withholding like you had from your paychecks.  You can have any percentage or none taken out.  You have to fill out your tax return to see what the total tax will be on all your income combined.  Then the withholding is subtracted.  

[johnd84]

The 20% is part of your taxes. Let's say for example your tax rate ends up being 21%. You may have slightly low withholding and you would owe the additional amount. Alternatively, let's say your tax rate ends up being 19% you would have slightly higher withholdings and you would get credit for it. Either way the 20% you are withholding will be taken into account on your return 🙂 

[sd3534]

Okay now I get it, thanks very much, really appreciate the help!