Filing taxes

[Gregp76]

I had a previous 401k loan and lost my job but now im drawing only social security disability. It is not taxed so i don’t have to file taxes on it. If the 401k loan defaults will i have to file taxes on the taxes and penalty they withhold? 

[Bsch4477]

You will receive a 1099-R and will pay tax and a 10% penalty if under age 59 1/2. 

[Hal_Al · Accepted solution]

Q.  If the 401k loan defaults will I have to file taxes on the imputed distribution  income, shown on the orm1099-R? 

A. Simple answer, yes.  The fact that the  penalty has to be calculated mandates that a tax return be filed.  You will want to file a tax return as there will probably be a refund.  It's unlikely that the 401k plan administrator will calculate the tax and penalty exactly.  

If the amount is large enough, it could cause some of your social security to become taxable. 

Social security  becomes taxable when added to sufficient other income. 

Social security, including disability (SSDI) becomes taxable when your income, including 1/2 your social security, reaches:

Married Filing Jointly(MFJ): $32,000

Single or head of household: $25,000

Married Filing Separately and lived with your spouse at any time during the tax year: $0