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    lalji's Avatar
    lalji Posts: 81, Reputation: 2
    Junior Member
    		  
    #1

    Feb 10, 2017, 09:17 PM
    401K withdrawal
    I have permanently moved back to my home country after working for 10 years on H1B. My questions are:

    1) Do I have to pay a penalty on early withdrawal on H1B. Do I have to pay Illinois state taxes if I withdrew after moving back to India
    2) Do I get to deduct moving expenses, etc

    Thanks
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Feb 10, 2017, 10:06 PM
    1) Assuming you speak of the 401K or IRA you opened while in the U.S. The answer is YES. If you withdraw from either the 401K pr IRA before you are 59.5 years of age, you WILL owe the 10% Early withdrawal Penalty.

    2) You cannot deduct moving expenses moving back to India UNLESS you continue filing U.S. tax returns after you return to India.
    lalji's Avatar
    lalji Posts: 81, Reputation: 2
    Junior Member
    		  
    #3

    Feb 11, 2017, 10:15 AM
    Yes, for 2016 I will be filing Form 1040
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #4

    Feb 11, 2017, 02:16 PM
    Also, if you left the state of Illinois, then did the withdrawal, then Illinois has NO legal standing to tax the withdrawal.
    lalji's Avatar
    lalji Posts: 81, Reputation: 2
    Junior Member
    		  
    #5

    Feb 12, 2017, 06:49 AM
    So for 2016 can I claim moving related expenses related to moving back to my home country?
    suntaxfla's Avatar
    suntaxfla Posts: 18, Reputation: 1
    New Member
    		  
    #6

    Feb 12, 2017, 08:09 AM
    The US-India tax treaty has some benefits if you take it out in periodic payments.
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