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If I take an early withdrawal from my 401k, where does the IRS take the 10% penalty from? Does it come out of my tax return or is it a separate fee?

Forum|Forum|2 years ago
December 9, 2023
2 replies
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Under 59yrs old, taking a $25k withdrawal both state and federal taxes being held upfront

TurboTax Online

Best answer by VolvoGirl

The 10% Early Withdrawal Penalty is automatically included in your tax return and tax due (or reduces your refund). It will break out and show the 10% penalty separately on your return (schedule 2 line 6 which goes to 1040 line 23). Then you get credit for all the withholding taken out on 1040 line 25b.

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xmasbaby0

Employee

If you take a distribution from your retirement account, you will receive a 1099R in late January or early February, which must be entered on your tax return. That document will show how much tax was withheld and will indicate if it was an early distribution. The software will do the calculations and determine if you had enough tax withheld or if you owe more. You do not pay the 10% early penalty as a "separate" fee.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

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xmasbaby0

Employee

To enter your retirement income, Go to Federal> Wages and Income>Retirement Plans and Social Security>IRA 401 k) Pension Plan Withdrawals to enter your 1099R.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

VolvoGirlAnswer

Employee

The 10% Early Withdrawal Penalty is automatically included in your tax return and tax due (or reduces your refund). It will break out and show the 10% penalty separately on your return (schedule 2 line 6 which goes to 1040 line 23). Then you get credit for all the withholding taken out on 1040 line 25b.