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engrebuilder · Jan 4, 2007, 05:32 PM

I'm a 37 year old male... single (not married)... factory worker for about 19 years... took out a 26K 401K hardship withdrawal last year. Out of the 26K, they sent me a check for 22K and some change... This means they kept about 4K. If my salary was 33K, not counting the withdrawal money, what am I going to owe in taxes in April? Thanks, Marty

AtlantaTaxExpert · Jan 4, 2007, 06:01 PM

Given the data you cite, and NOT counting the $4K that was withheld, your federal income tax is $10,001. That include the 10% Early Withdrawal Penalty.

What exactly was the withdrawal for? And what state are you living in?

engrebuilder · Jan 4, 2007, 06:04 PM

Home purchase... Ky.

AtlantaTaxExpert · Jan 4, 2007, 06:10 PM

Pity! If you had rolled the money into an IRA, you could have withdrawn the money, and $10,000 of it would have been EXEMPT from the 10% Early Withdrawal Penalty under First Time Buyer exemption.

engrebuilder · Jan 4, 2007, 06:13 PM

Thanks... I usually get back between 1200 and 1500 from Federal each year, plus I also have an extra 5.00 taken out for federal taxes each week. WIll this offset the 10K bill by much?

AtlantaTaxExpert · Jan 4, 2007, 07:26 PM

Well, you have already had $4K withheld, so the actual tax due is about $6,000.

Still, you better plan on making payments in a tax payment plan for a few years.

engrebuilder · Jan 4, 2007, 07:46 PM

So, just so I understand... your normal refund amount won't really offset what you would owe? Like, you owed 10K, they already took 4K... you owe 6K, but you were getting a 1200.00 refund, so you now owe 4800.00..?. You see where I'm going here? I would owe 6K regardless of if I would have had a refund or not? Isn't the normal deduction 4 or 5K? I totally trust your info, I'm just easily confused with this stuff... Thanks again!

AtlantaTaxExpert · Jan 4, 2007, 09:30 PM

The $5,150 standard deduction was already factored into my tax calculations.

Your tax liability before ANY withholding was $10,001, They withheld $4,000 from the 401K distribution, so your tax withholding from your salary has to cover $6,000. Not likely.

Your tax bill will be the difference between what your total federal income tax withholding was and $6,000. Since you have not told what was withheld from your pay, I cannot answer for sure what you will have to pay when you file tax return.

However, based on what you HAVE told me, I think your annual withodling is about $4,000. If I am right, you will have to pay about $2,000 when you file your tax return.

If I were you, I would start saving right now. You have until April 15th to collect the money to pay the tax bill. Otherwise, you will have to pay on a payment plan.