I w/d from my 401k in 06 & taxes were w/drawn; now I have to claim as income for 06; can I claim any in 07?

Question

Adding this as income will cause me to have to pay the IRS $11k; money I don't have. Is there a way to make payments to the IRS? if so, who do I contact?? Also, can any of the 401k w/ds be put on 2007 tax returns? need help

Answer 1

The money is all taxable in 06, you can't carry it over to 07. You can request an installment plan by filling out form 9465 and sending it with your tax return. It is not guaranteed approval, so you should also start looking for ways to come up with the tax you owe unless you are willing to take the penalties and interest for not paying on time.

Answer 2

You cannot carry over the withdrawal to a future year. There is one exception: distributions by those effected by Hurricane Katrina can be spread out over three years.

If taxes were withdrawn, the $11K additional tax sounds excessive. If you withdrew the money for specific purposes such as buying a home, paying COBRA health insurance, or paying large medical expenses, you may escape some of the penalty.

Have someone take a good look at your return before you file it. If you have a large balance, you can pay in installments, although other means of paying your taxes such as a bank loan are going to be cheaper.

Answer 3

Income cannot be carried over from one year to the next. If you took the distribution in 2006, you have to claim it in 2006.

If you file the return, owing the IRS money and you don't include full payment, they will contact you. You will have the opportunity to set up payment arrangements.

Answer 4

Note that the IRS installment plan is an expensive way to go. Look at all other options for borrowing the money, to see if you can find a less expensive way.

Answer 5

Contact the IRS to set up payment arrangements before they hit you with any penalties or late fees.