[wifeneedstoknow]

Oooops, I closed the question before I received an answer:

We received a notice from the IRS that my husband received $6k in income in 2006 from a job he left in 2005; the notice is a demand for $1600 in additional taxes.

I believe, but cannot get my husband to admit, that he cashed in his 401k, which is a whole different issue than the one that surrounds my question; if he cashed it in, would this have been reported to the IRS as income by the former employer or would all tax notices have come from the company administering the 401k?

I need to track down where this came from quickly as the taxes and penalty are due in 5 days.

[Wildsporty]

If the company administer's it's own 401K it would send out the tax notice (1099-G) to the IRS and if another company administer's the 401K they would send out the tax notice (1099-G) to the IRS. Either way you should have received a copy of the notice to file with your taxes.

It could even be a mistake and perhaps someone got the wrong name or social security number on a tax form.

I would call the IRS and talk to them about it. Explain that you do not know where the money could have originated from and ask them if they can help you figure out where the money came from that you have not received a 1099 . They should have a copy of the 1099 form. You can call 1-800-829-1040.

Shirley

[ScottGem]

Ask the IRS for the source of this $6K in income. They will tell you where it came from.

[ebaines]

If your husband cashed in his 401(k) he should have received a 1099-R in January 2007 from the plan administrator. The administrator should have withheld 20% income tax on the distribution - that is, if your husband cashed in a $6K 401(k) account they should have withheld $1200 for the IRS and sent him a check for the remainder. If he did not report the distribution in his 2006 taxes, he may owe more income tax on the distribution (depending on your tax bracket), and he would also owe the 10% early withdrawal penalty. It seems unlikely that the underpayment notice you have received from the IRS is for that. One other possibility is that he could have taken a loan of $6K from his 401(k) while he was an employee of the old company, and then when he left if he didn't repay the loan they would reclassify it as an early withdrawal, and income tax plus the 10% penalty would be owed - maybe that's what happened.