[KCGordon]

I withdrew money from my retirement IRA and now it's tax time. I owe with federal and state about 12,000 dollars. We are already in a financial bind. What would be my best option to this problem. A tax lawyer? We took it out to pay back mortgage and CC bills. I know this is a no no, but were should I go from here.

[Izannah]

I did the same thing several years ago when I changed jobs. Thankfully, my tax bill was nowhere near the $12K mark! What I ended up doing (and there probably was a cheaper way to get out of it or at least knock some of it down) was contacting the IRS and arranging payments for the federal taxes (could probably do the same for state, I reckon). They pretty much let me set it at whatever I "could afford"... I honestly told the lady $2 when she asked me, but couldn't keep from giggling when I said it!
Anyway... I ended up paying it off in $50 increments, took it right out of my check so I never even really missed it. Of course they charge interest and snag whatever tax refund you have in the future until it's paid off...
This may not be the best option for you and a tax lawyer would probably slap me silly for even suggesting it, but I thought I'd share my own experience with it. I can say that last month was my FINAL PAYMENT! WOO HOO!! There is light at the end of the dank dark IRS tunnel!

[MukatA]

Early withdrawal from IRA is subject to 10% penalty and withdrawal is taxed as your regular income.