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    jewelbeverly's Avatar
    jewelbeverly Posts: 1, Reputation: 1
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    #1

    Dec 22, 2010, 08:06 AM
    10% Early Withdrawal Penalty and taxes
    I need to take $8,000 from my retirement money, and I earned $60,000. After I pay the 10% early withdrawal penalty how much money should I send to federal and Maryland for taxes?
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    Dec 22, 2010, 09:27 AM

    When you take the withdrawal they should automatically withhold 20% for federal taxes. As with withholding from your regular wages this is advance on what you may actually owe, which can't be determined until you do your taxes. The actual amount of taxes due on this withdrawal will depend on your filing status and adusted gross income. As for MD, this withdrawal is added to your ordinary income for tax purposes. The tax rate in MD ranges from 2% to 6.5%. So here's what to expect:

    You will receive a check of $8K minus 20% witholding = $6400. You will owe 10% = $800 payable to the IRS for the penalty, plus perhaps 5% = $400 to MD for income tax. Thus don't plan on spending more than about $5K of the withdrawal, or you may be short of funds come April.
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