Question

Am I being double taxed for taking a CARES Act early withdrawn in 2020 on my 401K when I also paid federal tax on that withdrawal?

Forum|Forum|3 years ago
February 22, 2023
1 reply
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I withdrew $45K in 2020 and withheld $11K in federal taxes. When I filed 2020 taxes, and was approved for the CARES Act, $15K was immediately added to my taxable income and I was taxed on that $ even though I withdrew federal tax during the distribution. Am I being double taxed? Why did I withhold federal taxes during distribution if I have to pay tax on the gross amount over 3 years?

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D

DanaB27

No, you are not double-taxed. The 11k tax withheld won't be spread over the 3 years, therefore, you most likely got some of the tax withheld back with your 2020 tax return ( (depending on your tax bracket). You can see the tax withheld on line 25b of your 2020 Form 1040.

Please be aware, that retirement distributions are taxed according to your tax bracket.

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