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At the age of 59 1/2 I cashed out a 165,000 401k and federal

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income taxes were withheld...
At the age of 59 1/2 I cashed out a 165,000 401k and federal income taxes were withheld in the amount of 33000.
My income tax service added the 165,000 to my taxable income for the year? Is this correct I pay twice?
Submitted: 1 year ago.Category: Tax
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7/6/2016
Tax Professional: Richard, Tax Attorney replied 1 year ago
Richard
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Customer reply replied 1 year ago
Thank you
Tax Professional: Richard, Tax Attorney replied 1 year ago

You need not worry about being taxed twice. The $33,000 withheld is treated just like the withholding on your income during the year. When you go to file your tax return, the amount cashed out is treated as income for determining your taxable income and taxes owed. BUT, then you are credited with the $33,000 that was withheld against the tax owed. It's the same with how the amount withheld from your income during the year is credited against the tax owed to determine whether or not the net amount means you owe a bit more or are entitled to a refund.

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