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in relation to 2008 tax filing.2008 my wife was retired effective

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(Oct2006)full retirement age in April(2008)...
in relation to 2008 tax filing.2008 my wife was retired effective (Oct2006)full retirement age in April(2008). I was retired a year April 2009 age 63. We recieved court custody of two grand children due to death of their mother ages 3 and 6. which meant remodeling our home to accomadate them. Remodeling problems with mold and termite damage added the cost tremendiously above our saving and income. We used 401k money to finish the job. Which ran our income way above what was normal. my question is, is there a hard ship waiver or something similar we can use to lower our tax liability and adjusted income? thank you for your help!
Submitted: 7 years ago.Category: Tax
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Answered in 15 minutes by:
12/1/2009
Tax Professional: JKCPA, CPA replied 7 years ago
JKCPA
JKCPA, CPA
Category: Tax
Satisfied Customers: 5,884
Experience: CPA with tax experience.
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Hello,

 

Thank you for your question.

 

As for the 401k withdrawal to remodel your house, there is no hardship waiver for tax on this distribution. This is because the amounts in a 401k account are generally all pre-tax amounts. The contributions to your 401k were never taxed previously. If you had any after-tax contributions in your 401k account, then a portion related to the after-tax amounts would be non-taxable.

 

If you were under age 59 1/2 (or 55 with full retirement), you could qualify for an exception to the additional 10% tax penalty but since you have met the age restrictions, there will be no early withdrawal penalty.

 

The good news is that you will probably qualify to claim the children as dependents and receive child tax credit.

 

Hope this helps,

Best regards,

 

JKCPA
JKCPA, CPA
Category: Tax
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