I took funds from my 401K account to pay a tax bill. Can that amount be deducted from my federal tax bill showing due?

Forum|Forum|1 year ago
February 4, 2025
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I paid an estimated tax bill for roughly $6,000.00 last year. Turbo taxes used to have a question asking if the 401K withdrawal was to pay a tax bill. Is this availab;e?

Best answer by DoninGA

Payment of taxes owed is not an exception to the 10% early distribution penalty when using a 401(k) account.

The amount withdrawn is entered on your tax return as ordinary income and taxed at your current tax rate The 10% early withdrawal penalty is assessed on your federal tax return as a tax liability.

If the total of all tax payments is greater than your total tax liability then you will receive a tax refund for the overpayment.

DoninGAAnswer

Employee

Payment of taxes owed is not an exception to the 10% early distribution penalty when using a 401(k) account.

The amount withdrawn is entered on your tax return as ordinary income and taxed at your current tax rate The 10% early withdrawal penalty is assessed on your federal tax return as a tax liability.

If the total of all tax payments is greater than your total tax liability then you will receive a tax refund for the overpayment.