IRA early withdrawal

[Adona]

I withdrew $10,000 from my IRA and did not have any taxes withheld, I’m not 59 1/2 years old, but needed the money since unemployment ended and I had expenses. I also have cancer and health related expenses so I don’t think I have to pay the penalty for early withdrawal, but will I still have to pay federal and state taxes on the money?  Will the taxes I pay be based on the income I made in 2021 which was only the unemployment?

[RobertB4444 · Accepted solution]

If you qualify for an exception to the early withdrawal penalty (which, based on your medical expenses, it sounds like you do.) then the only taxes that you have to pay will be your regular income tax expenses.  Yes, it will be added to your unemployment income for 2021 in order to come up with your taxable income for the year.