Ask Experts Questions for FREE Help !
Ask
    mamasu2's Avatar
    mamasu2 Posts: 8, Reputation: 1
    New Member
     
    #1

    Apr 7, 2007, 01:17 PM
    401k to pay taxes?
    :confused: Could someone answer a really weird question ? can I use my very small 401k to pay the irs?
    thanx,
    mamasu2
    Mobea's Avatar
    Mobea Posts: 220, Reputation: 15
    Full Member
     
    #2

    Apr 7, 2007, 05:46 PM
    I would Definitely advise against that. You would end up paying 30-50% taxes and penalties on the money that you would withdraw from it. It just doesn't make sense to do that. If you owe the IRS, they will set up a payment plan with you that is usually at relatively reasonable interest rate. Or you can pay with a credit card. But it just isn't a good idea to use your 401K to pay the IRS. No, No and double no no.
    mamasu2's Avatar
    mamasu2 Posts: 8, Reputation: 1
    New Member
     
    #3

    Apr 8, 2007, 02:29 AM
    Thank you so much for your response. I am already on a payment plan. I have been paying them 200.00 a month for two yrs and i still owe as much as I ever did..I would rather take out what I can get and try to do it that way, there has to be a better way...but again thank you for your answer.
    mamasu2:)
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
    Computer Expert and Renaissance Man
     
    #4

    Apr 8, 2007, 05:17 AM
    See if you can take a loan against the 401K. At least then you will be paying yourself back.
    mamasu2's Avatar
    mamasu2 Posts: 8, Reputation: 1
    New Member
     
    #5

    Apr 8, 2007, 10:56 AM
    Thank you so much for your answer. I am going to look into asking for a loan.mamasu2
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
     
    #6

    Apr 17, 2007, 10:49 AM
    Agreed! Loan is the best option, though you MAY want to look into an Offer in Compromise.
    mamasu2's Avatar
    mamasu2 Posts: 8, Reputation: 1
    New Member
     
    #7

    Apr 17, 2007, 01:44 PM
    I don't have enough available for a loan,, this is too confusing for me... I need to just take out the entire 401k, but I don't want to quit my job, just yet.
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
    Computer Expert and Renaissance Man
     
    #8

    Apr 17, 2007, 04:08 PM
    You don't need to quit your job to wiothdraw money from your 401K. However, with tax liability and 10% penalty, it doesn't really make sense to do so.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
     
    #9

    Apr 24, 2007, 09:20 AM
    If your payment plan is not cutting down the amount of tax owed, you need to talk with the IRS about an Offer in Compromise.

Not your question? Ask your question View similar questions

 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Tax penalty to take 401k to pay off house [ 3 Answers ]

:confused: Is there a tax penalty if you take 1/3 of your 401k to pay off your home loan?

Use 401k to pay down heloc [ 3 Answers ]

We have a HELOC with a balance of 83000 at 8.25 int. rate. We are wondering if it would be a good idea to withraw 100k to pay down the HELOC. We are in 15 tax bracket. Thanks

What taxes do I have to pay? [ 1 Answers ]

I am a licensed hairstylist and I pay booth rent in a salon(self employed). I reside in Kansas but I work in Missouri. I currently pay the 1% Mo earnings tax and I pay my estimated taxes to Mo. What other taxes am I susposed to be paying or, are those two taxes sufficient. Should I be paying some...

401K to pay taxes [ 2 Answers ]

Is there a penalty for early withdraw on a 401k to pay a past tax lien?

Do I need to pay NJ taxes? [ 1 Answers ]

I live and work in New Jersey. But my company is incorporated in Delaware and hence they withhold DE state tax and that is the only state tax withheld on my W2. I know I have to file DE non resident return but do I have to file a NJ return if there I have no NJ income? Please reply.


View more questions Search