For many reasons I owe the IRS about 14,000 dollars. I have about a whopping 18,000 dollars in my 401k. I keep trying to pay the IRS, I can't pay enough for it to make a dent. Please, any suggestions, any IRS agents out there?:)
2007-04-08 22:47:00 · 4 answers · asked by Linda L 2 in Business & Finance ➔ Taxes ➔ United States
You can but the distribution will be fully taxable, plus a 10% penalty tax. If you're in a 25% tax bracket, it will add nearly $5k to your total tax bill if you just pulled $14k to pay off the current bill. If you yanked the whole thing you'd still have about a $1,000 tax bill after all was said and done.
2007-04-08 23:11:50 · answer #1 · answered by Bostonian In MO 7 · 3⤊ 0⤋
If you're still employed by the company that holds the IRA then the answer is probably no. Owing the IRS is not a hardship withdrawal eligible reason for a distribution. You'd have to quit your job to access the full amount at which point that 10% penalty and the tax bill will hit you. I would keep making payments and then pay them off if or when you sell your home.
2007-04-10 10:36:56 · answer #2 · answered by digdowndeepnseattle 6 · 0⤊ 0⤋
Not a good idea. You'll owe income taxes on the withdrawal, plus a 10% penalty on the amount withdrawn if you're under age 59-1/2, so you wouldn't end up with anything like the total 401K amount available to pay your taxes, even if your plan allows a withdrawal like this which it very likely does not.
2007-04-10 03:05:12 · answer #3 · answered by Judy 7 · 0⤊ 0⤋
Not sure, but you should be able take money from your 401k for any reason. don't really recommend it.
2007-04-09 05:58:24 · answer #4 · answered by beareyouseae 3 · 0⤊ 1⤋