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I just received a 1099-R from my IRA retirement account. My…

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I just received a 1099-R...
I just received a 1099-R for withdrawals from my IRA retirement account. My son has had a good income for years, but this past year he was laid off and trouble finding comparable work. He then became ill and had surgery. He needs more surgery and still has medical problems. I offered (he never asked) to help him. I am low income but felt I had to help so that he wouldn't lose everything. The amount of the loan was $85,000 and I paid the 10% tax each time. Now, I am anxious I will be in a different tax bracket and will have to pay tax again which I don't have. Can I use this as a loss (he will pay it back eventually) or because I cannot work because of disability?
Thank you.
Submitted: 2 years ago.Category: Tax
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1/26/2016
Tax Professional: Tax.appeal.168, Tax Accountant replied 2 years ago
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 4,637
Experience: 3+ decades of varied tax industry exp. Tax Biz owner
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Q1: Can I use this as a loss (he will pay it back eventually) or because I cannot work because of disability?

A1: Unfortunately you cannot. The distributed amount from the IRA is taxable as ordinary income. If you're younger than 59-1/2 years old, the 10% early withdrawal penalty applies. You likely will be bumped up to a higher tax bracket. While it is understandable why you wanted to help your son, there is not a way to get around paying the additional tax associated with the withdrawals.

Let me know if I can be of further assistance to you regarding this matter.

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Customer reply replied 2 years ago
I am over 59-1/2
Customer reply replied 2 years ago
I am over 59-1
Tax Professional: Tax.appeal.168, Tax Accountant replied 2 years ago

The 10% early withdrawal penalty is not applicable since you are over 59.5 years of age, however, the distributed amount will still be taxed as ordinary income. If you don't have the funds to pay the taxes dues, you can request to placed on an installment agreement payment plan. You can read more about that at the following link;

https://www.irs.gov/Individuals/Payment-Plans-Installment-Agreements

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Tax Professional: Tax.appeal.168, Tax Accountant replied 2 years ago

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