I withdrew 21,900 from my 401K for my first time home purchase. I had the money taxed at 7%. What kind of tax bill should I expect, when I file my 2009 taxes. I am in the 40,000 tax bracket and have no real deductions.

Thanks for help.

If you are not 59 1/2, then you will pay early withdrawal penalty of 10% plus the entire withdrawal will be treated as your income.

With 40K income and no read deductions, you top tax slab may be 25% that is you will pay 15% of $21900 as federal income tax.

Also, don't forget that if you live in a state and/or municipality that has an income tax, you will have to pay tax to them as well on this additional $21,900 of income.

First home exemption from penalty.

Even if you are under age 59½, you do not have to pay the 10% additional tax on up to $10,000 of distributions you receive to buy, build, or rebuild a first home. To qualify for treatment as a first-time homebuyer distribution, the distribution must meet all the following requirements.
It must be used to pay qualified acquisition costs (defined later) before the close of the 120th day after the day you received it.

It must be used to pay qualified acquisition costs for the main home of a first-time homebuyer (defined later) who is any of the following.

Yourself.

Your spouse.

Your or your spouse's child.

Your or your spouse's grandchild.

Your or your spouse's parent or other ancestor.

When added to all your prior qualified first-time homebuyer distributions, if any, total qualifying distributions cannot be more than $10,000.


If both you and your spouse are first-time homebuyers (defined later), each of you can receive distributions up to $10,000 for a first home without having to pay the 10% additional tax.
Qualified acquisition costs. Qualified acquisition costs include the following items.
Costs of buying, building, or rebuilding a home.

Any usual or reasonable settlement, financing, or other closing costs.


First-time homebuyer. Generally, you are a first-time homebuyer if you had no present interest in a main home during the 2-year period ending on the date of acquisition of the home which the distribution is being used to buy, build, or rebuild. If you are married, your spouse must also meet this no-ownership requirement.

Date of acquisition. The date of acquisition is the date that:
You enter into a binding contract to buy the main home for which the distribution is being used, or

The building or rebuilding of the main home for which the distribution is being used begins.


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