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    tarabee's Avatar
    tarabee Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Jan 24, 2008, 07:53 AM
    Income tax
    I was recently laid off in Sept. 2007... I had to withdraw all 25k from my 401k. I paid federal taxes already. I know Im going to have a 10% penalty. My husband and I make about 94k annually. What approximate would our state tax be on this amount. We live in NJ. Also, would we be able to file for an extension only for the 401k
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
    Computer Expert and Renaissance Man
    		  
    #2

    Jan 24, 2008, 08:01 AM
    Umm Did you file your 2007 return yet? If not, then you haven't paid the federal taxes. The 20% that was withheld from your distribution was withholding in anticipation of taxes, it was NOT the actual tax. So the 25K will be added to your $94K and the $5K (20%) that was withheld will be added to the fed withholding from your salaries. So I suspect the actual taxes will be more than what was withheld.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #3

    Jan 24, 2008, 10:09 AM
    I GUARANTEE that the tax will exceed the 20% withheld.

    Tarabee is squarely in the 25% tax bracket for federal income tax.

    Add the 10% Early Withdrawal Penalty, and then the NJ state income tax owed, and I expect he will pay about 42% total.

    An expensive lesson on why you should NOT access the 401K early.
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