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JazzOlive
New Member

Do underpaid taxes get deducted from overpaid taxes?

I cashed out a 401k and I was told I need to pay $2,500 in state taxes on my withdrawal. When I wrapped up and filed my return, TurboTax said I was getting a refund and I don’t owe anything. Was my underpayment deducted from my overpayment and that’s why it says I’m getting an income tax refund? 

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1 Reply
DawnC
Employee Tax Expert

Do underpaid taxes get deducted from overpaid taxes?

If you entered the Form 1099-R into TurboTax, then yes, the withholding from your 401K distribution was applied to your tax bill.   If the amount of tax withheld was more than you owed, you would be entitled to a refund of the overpayment of withheld tax.    

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