apendrag0n
Jan 24, 2006, 10:19 AM
I  left the employ of a company that I had a 401K through and cashed it out.  They withheld 25% for taxes... How/where do I claim this on my 1040 this year?
AtlantaTaxExpert
Jan 24, 2006, 05:34 PM
Apendrag0n:
 
Your former employer will send you (and the IRS) a Form 1099-R to document your early cashout.  You will owe normal income taxes (both federal and state) plus a 10% earluy withdrawal penalty which cannot be mitigated.
 
You must file Form 1040.  You show the distribution amount on Line 16a and 16b and the 10% penalty on Line 60.  If you have mitigating circumstances for cashing in the 401K, you may get the 10% penalty waived by filing Form 5329.