I figured I owe about 2000.00 in taxes this year and have had a lot of medical expenses every year for the past 4 years, is there a way the IRS can deduct/take that money our of my 401K account? It would be the easiest for me for them to do that. If so, what do I need to do?
2007-02-19 00:24:31 · 8 answers · asked by J P 1 in Business & Finance ➔ Taxes ➔ United States
The short answer, alas, is no. If you have a 401k you are evidently in employment. Are you sure you are having sufficient tax deducted from your pay each week?
2007-02-19 00:29:28 · answer #1 · answered by skip 6 · 0⤊ 0⤋
Your 401(k) is just about the only thing that they can't touch.
They won't just jump in and start grabbing bank accounts or garnishing your paycheck though. You will be given a chance to work out a payment plan with them and you should do so quickly and STICK TO IT!
As long as you stay current on your payment plan, they will NOT start any levy or garnishment actions.
Resist the temptation to take the money out of your 401(k)! You'll have to pay income taxes on any early distributions plus a penalty tax of 10%. The plan administrator might not allow you to take the money out anyway. You MIGHT be able to take a loan from your 401(k) though if it is offered by the plan. You must pay it back before you retire or otherwise leave that job but it is an option with lower costs and no tax consequences.
2007-02-19 08:48:37 · answer #2 · answered by Bostonian In MO 7 · 0⤊ 0⤋
No the IRS will not take funds from your 401K. What you should do if you owe is send as much as you possibly can before April 17th. Then contact the IRS and set up a payment plan with them they will be charging interest and penalties until the balance is paid in full. There is a one time fee for setting up a payment arrangement of $105.00. See the attached link for more information
http://www.irs.gov/taxtopics/tc202.html
Call the IRS @ 1-800-829-1040 they are closed on 02/19/2007 due to the Federal Holiday
2007-02-19 08:35:25 · answer #3 · answered by Rob 7 · 1⤊ 1⤋
No. 401k money is an account in your name. The IRS cannot touch it. If you want to take it out, you have to fill out the paperwork with your employer.
But remember, there is a 10% penalty taken out of the amount withdrawn, and taxes on the remaining amount.
If you have alot of medical expenses, you can deduct them from your taxes owed (believe if they amount to at least 7% of your annual pay). Check with a tax adviser.
I'd look for another way to pay $2000, than touching your 401k.
2007-02-19 08:37:06 · answer #4 · answered by Anonymous · 0⤊ 1⤋
Nope, you gotta pay the IRS yourself. You can always withdraw money from your 401(k), but about 25% in taxes will be taken out if you're under the cutoff age.
So you'll end up paying a few hundred bucks more to take it out of your 401(k). Not a great deal.
However, you can always work out a payment plan with the IRS so you can pay your taxes in installments. I did this one year and it worked out fine.
2007-02-19 08:30:39 · answer #5 · answered by Anonymous · 0⤊ 0⤋
I owe about 5000.00 in back taxes and I am about to lose my job. so I want to pull my 401k to pay off bills and taxes. but well the irs take it first when I pull it out
2014-08-23 15:40:31 · answer #6 · answered by Faunda 1 · 0⤊ 0⤋
No, but they can take the money directly from your pay check.
2007-02-19 08:34:08 · answer #7 · answered by Mike 4 · 0⤊ 0⤋
they cant go in and take it from your 401 plan. you can take the money out yourself and give it to them
2007-02-19 08:32:37 · answer #8 · answered by Happy 3 · 0⤊ 2⤋