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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 11546
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Im drawing out money from my 401K to buy a house. Is this

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I'm drawing out money from my 401K to buy a house. Is this money counted as income on my tax return? I will already have paid 20 % withdrawal taxes on the money taken out for the house.

Lane :

Hi,

Lane :

Yes, the amount that you withdrew WILL be added to you taxable income for the year (you'll get a 1099-R)

Lane :

HOWEVER, the withholding that you had done (the 20%) will go against that - Works just like your W-2; WHatever you withheld will offset the tax

Lane :

DO remember that if you're under age 59 and 1/2 (or under age 55 if you left the company sometime after TURNING 55) there will be an additional 10% penalty tax on the amount withdrawn

Lane :

SO lets say that your other income for 2013 will be 50,000 and you withdrew 10,000 from the 401(k) ... you'll be reporting 60,000 of taxable income ... BUT the 20% that was withheld will offset (maybe more maybe less) the tax on that additional income

Lane :

Then the only other piece is (if you are under the retirement age) there will be an additional 1000 of tax (the 10% penalty on that 10,000).

Lane :

So depending on your TOTAL situation, the amount withheld may be well over the additional tax and create an refund ... if the 20% WASN'T enough to cover the tax (and any tax penalty than might be there because if age) .. then you might have to pay a little more, come tax time.

Lane :

Make sense?

Lane :

I still don't see you coming into the chat session, so I'll move us to the "Q&A" mode. … Maybe that will help … (We can still continue a dialogue there, just not in real-time chat, as we can here)


Please let me know if you have any questions at all ...


Lane

Lane and other Tax Specialists are ready to help you

Hi Linda,

… just checking back in here, as I never saw you come into the chat.

Please let me know if you need anything else at all on this.

Lane


Thanks for the rating Linda!

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OR set me up as your preferred expert on your home page.


Regardless, thanks again,

Lane