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    taxmanmark2008's Avatar
    taxmanmark2008 Posts: 2, Reputation: 1
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    #1

    Jan 22, 2008, 01:06 PM
    401k withdrawal while on disability
    In the last year, 2007, my wife withdrew funds from her 401k that she had with the company she used to work for. We got a statement from the bank that held it indicating the amount that was taken out. She has been drawing disability pay monthly for the last 2 years. What would be her tax liabilty, if any, on the money that was taken out of the account?
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
    Computer Expert and Renaissance Man
     
    #2

    Jan 22, 2008, 01:16 PM
    Do you file jointly as married? If so, then the total amount of the withdrawal is added to your joint income and taxed accordingly.
    taxmanmark2008's Avatar
    taxmanmark2008 Posts: 2, Reputation: 1
    New Member
     
    #3

    Jan 23, 2008, 10:04 AM
    Quote Originally Posted by taxmanmark2008
    In the last year, 2007, my wife withdrew funds from her 401k that she had with the company she used to work for. We got a statement from the bank that held it indicating the amount that was taken out. She has been drawing disability pay monthly for the last 2 years. What would be her tax liabilty, if any, on the money that was taken out of the account?
    We do file jointly. We use TurboTax to do our taxes and I figure it will usually asks the questions about disability. I didn't know if this had to have a separate file status. Thanks for the heads up.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
     
    #4

    Jan 23, 2008, 09:01 PM
    If your wife is disabled, you can attach Form 5329 to the return to claim an exception to the 10% Early Withdrawal Penalty.

    You STILL have to pay taxes, though.

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