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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 14435
Experience:  15years with H & R Block. Divisional leader, Instructor
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Have a question about early Ira withdrawl I'm trying to

Customer Question

Have a question about early Ira withdrawl I'm trying to understand the penalty associated with early withdrawl and the taxation following early withdrawl ? As far as I been told early withdrawl in my if state matters will penalize me 10% and then I was told I'd be taxed in the money I withdraw as income , how does the racing work is it just added to my yearly income from work and other things and then taxed as a total depending what bracket I fall in ? Or is the Ira money amount after 10 percent penalty is taken taxed alone in its own tax bracket based on fact it was Ira money that I withdrew early I'm 36 and my Ira doesn't mature and is not available for withdrawl Tull I'm 59 and a half
I had total of 13000$ in Ira and I took 10000 of it out for down payment on house and now I have 3700$ left in Ira and I'd like to withdraw that and pay penalty but before I do so I want to know how it's going to be taxed one thanks to it being Ira money two being that I withdrew 10000 of that money penalty free for home buy
So will
I be penalized on just the 3700 now if I withdraw rest of money and will I also be taxed on just the 3700 or will me taking out the 3700 cause me to get penalized on total amount and taxed the same ? Shy info greatly appreciated thank you Ciro
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Hello

If you take money out of your IRA before you are 59 1/2 you will pay tax on the amount you take out and you will be penalized on that amount. The penalty is 10% of the amount you take out.

The 10% is shown on your tax return when you file. It is just a straight 10% of the total distribution shown on your 1099R (the document you are sent if you take out).

The total distribution is added to your other income for the year and taxed as regular income.

You pay regular tax on the total and 10% penalty on the total.

If you take out $3700 you will have a penalty of $370 AND the $3700 will be added to your income.

Please remember to rate my service excellent once you have all the information you need. If you have any other questions, please ask me – I’ll be happy to respond. Thank you!

Customer: replied 1 year ago.
My fathers accountant was telling me something like I was going to get taxed and or lose a total of 42% if I were to withdraw the Ira money early ?when I still had 13 k in Ira ( I only have 3700 now cause I took 10 out for down payment on house ) Why would this be why would he say 42% I oinly make about 50 k a year before Ira money
Expert:  Robin D. replied 1 year ago.

I do not know why he said 42% unless he was adding all your taxes (fed, state, penalty).

I can just tell you that the penalty is applied to the total of the distribution.

Customer: replied 1 year ago.
the 10$k I took out for down lumber in house would still be exempt of being penalized correct due to favt I took it out as down payment for house which my father accountant said was penalty free if I use it for down payment and provide proof of ? And as far as tax bracket I'm in, according to what I read online at Ira website I am in the 25% tax bracket even if I withdrew my total Ira if still be way under the amount for next tax bracket
Expert:  Robin D. replied 1 year ago.

An exception t the penalty can apply. A first time home purchase is an exception up to a limit of $10,000.

Most likely the withdraw would not push you up.

Now I am going to ask that you click on a favorable rating.