Question

If I do an early withdrawal from my retirement account, I understand that I will be subject to the 20% federal income tax as well as a 10% early withdraw penalty. Will that withdrawal amount be considered income for the year and be taxed federally ag

Forum|Forum|7 years ago
June 5, 2019
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TurboTax Free Edition Online

Employee

The 20% that you heard about is mandatory tax *withholding* on a distribution that is eligible for rollover, not your actual income tax liability for the distribution. See the answers below regarding how your income tax liability is determined.

O

Opus 17

Employee

You will owe regular income tax, which can be between 10%-39% depending on your other income. You will also owe a 10% penalty. Any withholding at time of withdrawal is only an estimate. The actual tax due is calculated on your tax return, and if you did not have enough withheld you will have to pay more; if too much was withheld you get it back as a refund.

Don't forget state income tax as well.

S

SweetieJean

Employee

The withdrawal amount will be considered income for the year, but the program will give you credit for taxes withheld (just like with a W-2). Your actual tax due may be more or less.

Remember state taxes as well.