If I close (cash out) my IRA account early and if the total amount of my IRA (and the interest) plus my other total income is under the standard deduction, would I still owe money?
2006-09-28 11:34:20 · 5 answers · asked by Brenda P 1 in Business & Finance ➔ Taxes ➔ United States
The penalty is something you pay directly. It doesn't get lost in the deductions anywhere. Even if your income is under the standard deduction, you would still have to pony up that 10%.
2006-09-28 14:34:23 · answer #1 · answered by misslabeled 7 · 1⤊ 0⤋
because you've study up in this, you keep in mind that you'll take your loss once you liquidate all of your IRA expenditures contained in the three hundred and sixty 5 days you liquidate all of them. in order to get any type of deduction on your loss, you should get rid of each little thing interior an identical 3 hundred and sixty 5 days. once you've different IRA expenditures, those must be liquidated to boot...each little thing. enable me anticipate that it truly is your only IRA, and that you've by no skill taken something out of your IRA earlier, which may change the theory of your funding. The stickler is this: the theory on your IRA is the packed consisting of your nondeductible contributions. i will anticipate you've $25,000 in nondeductible contributions, it somewhat is the case once you've a Roth IRA as an celebration. in the experience that your foundation contained in the IRA changed into $25,000, and also you liquidate it for $2,000, you could take a deduction for the shortcoming of $23,000 as a miscellaneous deduction on variety 1040 time table A. This deduction is challenge to a 2% of AGI floor. this would reason your itemized deductions to absolutely wipe out your income tax legal duty, inspite of the reality that you do not somewhat get a $23K deduction, because you forgo the classic deduction, plus you should shave off 2% of your AGI. at the same time as your income tax would nicely be 0, you'll nevertheless ought to pay the $2 hundred penalty tax on the early distribution. regrettably, this loss can not be carried ahead in case you could not take income of all of it.
2016-11-25 01:17:58 · answer #2 · answered by Anonymous · 0⤊ 0⤋
If you are less than 59 1/2 years old, you will owe the IRS a 10% penalty.
2006-09-28 12:23:40 · answer #3 · answered by johnnylakis 4 · 1⤊ 0⤋
Yes, you will owe the early withdrawal penalty. However, you may be able to offset the penalty by claiming earned income credit.
2006-09-28 12:20:39 · answer #4 · answered by Steve 6 · 1⤊ 0⤋
Yes u will owe the IRS a 20% penalty which can be somewhat offset by other credits you may be eligible for depending on your situation; Children, Hardship etc.
2006-09-28 12:40:15 · answer #5 · answered by Anonymous · 0⤊ 2⤋