Contact UsEarly withdrawal from 403(b): based on the CARES and the Consolidated Appropriations Act, the 10% penalty is waived for residents of 50 states (up to $100,000). How do I calculate the tax on the amount withdrawn? (20% mandatory tax)
For example, if the withdrawal is $10,000, the mandatory 20% tax in $2,000. So, I will get $8,000 in a check.
1. Will I report $10,000 or $8,000 income to IRS?
2. Will I report the $2,000 as taxes already payed on the received withdrawal (I assume $10,000)?
3. How to calculate the additional federal taxes? For example, if I'm in the 22% rate, then I will have to pay the additional 2% of $10,000 ($200)? Or, do I need to pay additional 22% on $8,000?
Thank you so much in advance!
1. Will I report $10,000 or $8,000 income to IRS?
2. Will I report the $2,000 as taxes already payed on the received withdrawal (I assume $10,000)?
3. How to calculate the additional federal taxes? For example, if I'm in the 22% rate, then I will have to pay the additional 2% of $10,000 ($200)? Or, do I need to pay additional 22% on $8,000?
Thank you so much in advance!
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Tax Professional Answers
Karen Swanson, EA
You would report $10,000 of income even if you only received $8,000. The $2,000 is reported as taxes paid. If you are in the 22% tax bracket you would owe the additional $200 in taxes. The whole thing will be reported to you on a 10999R which will show the taxable income and taxes paid.
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171 weeks ago