Have a Tax Question? Ask a Tax Expert
In what year did you cash it out?
how old were you?
Did you get a 1099-R?
Thanks for the information.
This is not going to be treated as an investment income. This is a retirment fund distribution, and sould indicate a code 7 for total distribution on your 1099.
If you did not redeposit it to another 401(k) as a roll over, then you will have to report his as an early distribution.
it will be taxed at your regular marginal rate, and you will have to pay a 10% early distribution penalty.
This get reported on form 1040 and figure the tax on line 59:
calculate the additional tax penalty directly on Form 1040 line 59, you:
Or use form 5329 http://www.irs.gov/pub/irs-pdf/f5329.pdf
If they did not take the penalty or enough at your markigal rate, then yes. Most plan adminstrators take 35% (25% as supplemental income withholding and 10% for a penalty). However other comanies leave you responsible for the penalty when you take an early distribution when you change jobs becuase you may roll it over and not have to pay the penalty. This may be what your employe did, so they just withheld at your regular marginal rate at the time.
This depends on your total situation. you may have some coming back.
Here is a quick test. Callit an acid fast test.
Your filing status is most likely head of household.
You have as total income: 38,346
minus 7550 single head of houshold deduction
minus 6800 exemptions
adjusted gross income: 23,996
The actual tax on this should be: 3383. This inclueds a child tax credit of 1,000 and the 10% penalty.
If you credit the amount that was taken by the plan administrator alreay, you need to pay in 1,027 more dollars. If your employer took that much or more from your salary you are covered.
Of course you might come up with more deductions, so would still be ok.
Try this calculator and apply all the information that pertains to you.