View Full Version : I paid 10% penalty on myIRA,can I claim it on my tax return
plymouth1967
Mar 9, 2011, 02:37 PM
I cashed in my IRA in 2010 and paid the 10% penalty and 10% tax-Can I claim the penalty on my tax return-I received a 1099r for the total amount paid,it does not separate the penalty from the tax.
AtlantaTaxExpert
Mar 18, 2011, 01:51 PM
There is a good reason for that: the 10% penalty is a PUNITIVE tax meant to discourage early IRA withdrawals and is therefore IN NO WAY deductible.
ebaines
Mar 21, 2011, 10:01 AM
To add a bit more info here - the 1099R that you received shows 20% withholding for income tax. It does NOT include the 10% early withdrawal penalty. You report the 10% penalty on line 58 of your form 1040 (“Additional tax on IRAs, other qualified retirement plans, etc.”), and you show the amount of tax withheld on line 61 (“Federal income tax withheld from Forms W-2 and 1099”).