Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

I cashed out my 401k - is that considered investment ...

I cashed out my 401k...
I cashed out my 401k - is that considered investment income for tax filing purposes?
Show More
Show Less
Ask Your Own Tax Question
Answered in 3 minutes by:
2/11/2008
Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10,760
Experience: GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
Verified

DearCustomer

In what year did you cash it out?

how old were you?

Did you get a 1099-R?

Ask Your Own Tax Question
Customer reply replied 9 years ago
Reply to Ed Johnson's Post: Cashed it out 2007.
I was 36 - cashed out because of new employment and divorce that year.

Is a 1099-R like a W-2 for that money? Yes - I received one of them.

Dear Jody,

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:

  • Look on Form 1099-R from your retirement plan.
  • Find the figure in boxes 1 (Gross Distribution) and 2a (Taxable Amount), and the code in box 7 (Distribution Codes).
  • Multiply the amount in box 2a by 0.10.
  • Report this amount on Form 1040 Line 60.
  • Write "No" on the dotted lines next to line 59 to inform the IRS that you do not need to attach Form 5329.

Or use form 5329 http://www.irs.gov/pub/irs-pdf/f5329.pdf

 

Ask Your Own Tax Question
Customer reply replied 9 years ago
I cashed out a total of $13, 789.14 and they kept $2,355.62 for federal income tax witheld. Does that mean I will have to pay in $1400 on my taxes?

DearCustomer

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.

Ask Your Own Tax Question
Customer reply replied 9 years ago
Reply to Ed Johnson's Post: So, if I am a single (divorced in March of 2007)mother with one child to claim and my income was $24556.64 + the $13,789 from my 401k cashed out. If I have to pay a $1400 penalty for cashing that out, does that mean I am going to owe alot of money when my taxes are done?

DearCustomer

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.

http://www.dinkytown.net/java/Tax1040.html

 

 

Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10,760
Experience: GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
Verified
Ed Johnson and 87 other Tax Specialists are ready to help you
Ask your own question now
Ask Ed Johnson Your Own Question
Ed Johnson
Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10,760
10,760 Satisfied Customers
Experience: GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee

Ed Johnson is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,338 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,980 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
What are the forms for reporting Rental Income to the IRS on
What are the forms for reporting Rental Income to the IRS on foreign properties - we collect each month? Is this filed separately from our personal returns?… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,068 satisfied customers
I have a question regarding child deductions when one parent
Hi - I have a question regarding child deductions when one parent who otherwise would claim them has lost custody. … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,980 satisfied customers
Am I able to take a deduction as head of household if I have
Am I able to take a deduction as head of household if I have a daughter that is 15, lives with me for more than half the year, but I am not claiming her as a dependent because her dad and I alternate … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,980 satisfied customers
Under the new tax plan if my federal adjusted gross income
Under the new tax plan if my federal adjusted gross income is $77,230.00 how much are my federal taxes? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,791 satisfied customers
On line 37 my 2015 Form 1040 I had an adjusted gross income
On line 37 my 2015 Form 1040 I had an adjusted gross income of $291,546. on my Amended 1040X for 2015 I have taxable income of $179,542. How do I get proof of this to get an adjusted MAGI to give to M… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,791 satisfied customers
This is an income tax question. I am thinking of Deducting
This is an income tax question. I am thinking of Deducting next years giving to church this year with pending changes to tax law. As I recall, higher income levels reduce schedule allowable deductions… read more
Lane
Lane
JD, MBA, CFP, CRPS
Doctoral Degree
37 satisfied customers
I made 40,000 this year But i was head of household for half
I made 40,000 this year But i was head of household for half the year and the second half of the year I was just renting Filed as single I've paid 9k in taxes is that about right? … read more
Carter McBride
Carter McBride
LLM
239 satisfied customers
FICA payroll employer tax withholding tax forms W-4 and W-2
FICA payroll employer tax withholding tax forms W-4 and W-2 forms. The accountant for the man I worked for from1976-1984 did not provide me with W-4 forms to complete and return to him or W-2 forms to… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,980 satisfied customers
Tax law.FICA Tax law. W-4 and W-2 payroll tax withholding
tax law.FICA Tax law. W-4 and W-2 payroll tax withholding from wages and salaries.gross pay and take home pay. number of hours measured direct work assigned by W-4 and W-2 forms. for Medicare eligibil… read more
Lev
Lev
Retired
Bachelor\u0027s Degree Equivalent
25,341 satisfied customers
What rate of withholding is applicable for a domestic
What rate of withholding is applicable for a domestic partnership with 2 foreign partners upon the selling of a rental property in US. … read more
Lane
Lane
JD, MBA, CFP, CRPS
Doctoral Degree
37 satisfied customers
Accidentally sent IRS an unsigned copy of our 2016 form 1040
accidentally sent IRS an unsigned copy of our 2016 form 1040 and later received a form 3531 requesting a valid original signature. Should that returned signature be dated to the original submittal dat… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,068 satisfied customers
I need to complete form 5329 for an RMD due but not taken on
I need to complete form 5329 for an RMD due but not taken on an inherited IRA. I have the instructions but they aren't clear to me. I have entered the RMD amount of $1780 on line 52. I have entered th… read more
Lev
Lev
Retired
Bachelor\u0027s Degree Equivalent
25,341 satisfied customers
Can i file head of household on my 2016 tax return if my
Can i file head of household on my 2016 tax return if my husband and I were going through a divorce proceeding but he passed away before the divorce was finalized in mid 2016?… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,791 satisfied customers
I qualify for renters credit and am head of household now
ok I qualify for renters credit and am head of household now how and where do I fill out necessary paperwork for 120.00 a year and do I ,or can I receive the credit for the past 2 years? thank you for… read more
Tax.appeal.168
Tax.appeal.168
Principal
13 satisfied customers
FEDERAL INCOME TAX: A SINGLE WOMAN RECEIVES A 2016 FORM W-2
FEDERAL INCOME TAX: A SINGLE WOMAN RECEIVES A 2016 FORM W-2 FROM HER EMPLOYER WITH A TYPO IN THE SOCIAL SECURITY NUMBER. TO DATE THE EMPLOYER HAS NOT PROVIDED A "CORRECTED" FORM W-2. IS THERE AN IRS "… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,277 satisfied customers
I have filed head of household due to being the only income
I have filed head of household due to being the only income and taking care of 5 kids yet I am married yet not together under the same roof do I need to amend my taxes I think I may have gotten wrong … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,980 satisfied customers
I filed my 2016 federal taxes and attached IRS Form 5329 and
I filed my 2016 federal taxes and attached IRS Form 5329 and asked for a waiver on the tax on an RMD. We received the RMD (in 2017) late through no fault of our own but because of the financial compan… read more
Lane
Lane
JD, MBA, CFP, CRPS
Doctoral Degree
37 satisfied customers
Form 1040 line #44 what taxes--federal income tax + social
form 1040 line #44 what taxes--federal income tax + social security +medicare tax, all or just federal? … read more
Lev
Lev
Retired
Bachelor\u0027s Degree Equivalent
25,341 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x