Tax question?

Question

I worked for a school district and recently took all of the money out of a retirement account and was assessed penalties and taxed federally on the amount. I took the money out because I have not worked and needed the money. Since I have not earned any money, can I get the tax I paid back on this when I file my 2008 return?

It was a very small amount. Only $3000. This is my only taxable income for the year.

Answer 1

If $3000 was your only income, then you will still have to pay the 10% penalty for early withdrawal. However, you should not have any tax liability.

Answer 2

As a general rule, if you withdraw money from a 401K prior to reaching 59-1/12 years of age you will pay a 10% penalty in addition to whaever income tax you are liable for on the Federal Level.
However, there are exceptions to this rule. If you took the money out to pay for medical bills, or for the purchase of your first home, you may be able to claim an exception and eliminate the 10% penalty. Nevertheless, you will pay a Federal Income Tax on this amount.

Answer 3

Typically, when you take money from a retirement account, they withhold 20%. 10% towards the penalty and 10% towards the tax. You may be able to get the latter back.

Answer 4

This will only happen to get money back if your penelties and tax is higher then what you should have paid. I took my 401K money from a job when I lost it in 2004 and ended up having to pay more taxes on the 2004 tax year. Get advise from a Tax Preparer or CPA. They will usually tell you in a heart beat sometimes over the phone.

Answer 5

seems like they will take out $300 (10% of 3000) and you will get the rest. You may have to pay some penalties for your state ( depends on your state), Califorrnia charge 2.5%

Answer 6

It will depend on your total taxable income for the year.