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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 13401
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I cashed out my retirement to save my home from foreclosure

Resolved Question:

I cashed out my retirement to save my home from foreclosure and was told by the banker that my situation falls under an exception because of hardship. Fast forward I recieved a later from the irs stating that I owe $2,279 due to income and payment info they have on file doesn't match the info I reported on my tax return. After calling irs for help the phone rep told me to fill out form 5329 part I & II plus print out instructions, so I have done this and am stuck unable to complete this form. I don't believe part II applies to me and don't see an exception in the instructions that applies to me can I get some help with this since this is the last day I have to get this form completed and on its way to the IRS.
Submitted: 1 year ago.
Category: Tax
Expert:  Megan C replied 1 year ago.

MyVirtualCPA :

Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

MyVirtualCPA :

How are you today

MyVirtualCPA :

You are correct, part II doesn't apply to you - that's for educational accounts

MyVirtualCPA :

You are not exempt from the 10% early withdrawal penalty - hardship withdrawals are still subject to the penalty unless they are one of the exceptions listed in the instructions to the form.

MyVirtualCPA :

http://www.finra.org/investors/protectyourself/investoralerts/retirementaccounts/p039023

MyVirtualCPA :

So you will enter the amount of your withdrawal on line 1 and line 3, then multiply that by .10 to get your additional tax.

MyVirtualCPA :

Then all that's left to do is sign the form and send it off to the IRS.

MyVirtualCPA :

I'm truly sorry about your misinformation. There is a proposal out there to waive the penalty in your particular situation, but unfortunately it has not been enacted yet.

MyVirtualCPA :

Your banker was incorrect in the information they gave you. I'm very sorry.

MyVirtualCPA :

Please let me know if you need any additional assistance

MyVirtualCPA :

If not, please take a moment to rate my response as "excellent" so that I may receive credit for assisting you today

Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 13401
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and other Tax Specialists are ready to help you
Expert:  Megan C replied 1 year ago.
Neko,

I see you were unable to join our chat. Please take a moment to review my response, and let me know if you have further questions. If satisfied, please rate my response as "excellent" so that I may receive credit for assisting you today. Thanks again for being a valued JustAnswer.com customer.

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