Taxes paid for withdraw for higher education

[Jax02]

What taxes and fees will I pay if I make a withdraw from my 403(b) account to pay for higher education before I'm 59.5 years old?

[marctu]

While I am not sure of the fees you may be for the distribution, I do hope they are de minimis.  There is nothing worse, then being charged a fee to access your money.  

So since you are under the age of 59.5 there will be a penalty for the distribution from the 403(b).  The penalty exception only applies to IRAs.  So you will owe a 10% penalty.    

The distribution will be included in the calculation of adjusted gross income, that will then after subtracting the standard or itemized deductions will result in taxable income.  I would suggest you use Tax Caster to help you.  Tax Caster will not handle the penalty calculation. 

Keep in mind that you may also be eligible for a tax credit for education.   See this article:

What Is the American Opportunity Tax Credit? 

and this article:

What Is the Lifetime Learning Tax Credit? 

Thank you for your question @Jax02 

All the best,

Marc T.

TurboTax Live Tax Expert

27 Years of Experience Helping Clients