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TaxRobin, Senior Advisor
Category: Finance
Satisfied Customers: 15032
Experience:  15 years of experience in financial advising with emphasis on tax issues.
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I have three quick questions. 1. I was out of work

Customer Question

Hello. I have three quick questions.1. I was out of work for close to five months in 2015 due to medical illness. I took $15,000 out of my tsp account, which is a 401K you get for working for govt. Was not a loan. I was told would have to pay taxes on it because I am 44. Ok, but now I am being told that I might have to pay an additional 10% penalty on this. I contacted the IRS and he said that you could get it waived if you were on disability. Well, I wasn't officially on disability, but I used up all my FMLA and then some. D o I have to pay the penalty?
2) I sold my house for $272,000. I had bought it two years prior for $262,000. The mortgage company was saying that they were going to file paperwork with the IRS as if I had a $250,000 profit and pay capital gains, but my realtor said that was incorrect, because I was only making a profit of $10,000. Which is correct?
Thank you.
Submitted: 1 year ago.
Category: Finance
Expert:  TaxRobin replied 1 year ago.
HelloIf you were not "officially" disabled then you should not use form 5329 to claim an exception on the 10% penalty. Your distribution is subject to the 10% penalty because you were not 59 1/2 or older.Your realtor is not correct and your understanding of the bank is not correct.If you owned and lived in the house as your main home for at least 2 years out of the last 5 years prior to sale then you are allowed to exclude up to $250,000 of the gain on the sale of your home. This would mean you would not pay tax on the amount over your cost up to $250,000. If you do not meet the 2 years then a 1099S is filed. You report the sale and you only pay tax on the actual gain.You are required to click a positive rating if I am to be credited with the response.You have to actively click on a rating and click submit. Smiley Faces or Stars.