Chat or Talk in the INReview Discussion Forum Chat or Talk in the INReview Discussion Forum
 
register chat members links refer search home
INReview INReview > The Scuttlebutt Lounge > Politics & Government > Taxes > Cashed out 401k in 03 due to hardship
Search this Thread:
  Print Version | Email Page | Bookmark | Subscribe to Thread
Author
Thread Post New Thread   
dcmidnight
Rookie

offline
Registered: Feb 2004
Local time: 02:44 AM
Location:
Posts: 4

Cashed out 401k in 03 due to hardship post #1  quote:



I was forced to cash out my 401k last May to the tune of $12,000. Of course after penalties and taxes I only actually got $4200 or so, but when you spend a year unemployed you do what you have to do. Anyway, after spending most of 03 unemployed, I am faced with a $6,000 tax bill due in part to this.

I have read the approrpriate IRS publications, and am no closer to an answer than I was before I started reading. In a circumstance like mine, why do they consider it was $12,000 in income, when I only received $4200? It wont be hard to prove hardship, they could see I was on unemployment until the benefits ran out.

Is there anything I can do to lessen my tax burden? Rolling it over now isnt an option because I am in the process of buying a house.

Thanks in advance for any help you can give me, I really appreciate it.

dc


Old Post 02-05-2004 04:19 AM
Click here to Send dcmidnight a Private Message Find more posts by dcmidnight Add dcmidnight to your buddy list Click Here to Ignore dcmidnight REPORT this Post to a ModeratorNOMINATE this Post for Reward Points Reply w/Quote

Ken NJ
INReview Maven

offline
Registered: Dec 2003
Local time: 09:44 PM
Location: NJ
Posts: 4930

Peter's Demand From Paul On Your New House post #2  quote:

It unfortunate the large unemployment we have in this country. Sorry to hear you're facing another. The details isn't clear and not sure your options. You might want to see someone locally to explain your situation.

<<<Is there anything I can do to lessen my tax burden?...why do they consider it was $12,000 in income, when I only received $4200? >>>

Yeah, check HR to see if mistake. Doesn't make sense from these facts alone. 65% tax? You in top tax bracket along with surcharge still doesn't make sense for an unemployed unless (1) you have at least several hundred thousand from investments and (2) you live in a high state and local income tax jurisdiction? You sure the figures are correct, where (3) your company didn't offset some draws or charged you for some bills, netting you $4,200? Track down missing $3,000 to $4000. Why don't you see what specifically was withheld?

You should be getting huge refund. You tell us unusual large withholding of $7,800 pre-payment and still facing $6,000 taxes owed? You yanking Peter about hardship?


Old Post 02-05-2004 01:19 PM
Click here to Send Ken NJ a Private Message Find more posts by Ken NJ Add Ken NJ to your buddy list Click Here to Ignore Ken NJ REPORT this Post to a ModeratorNOMINATE this Post for Reward Points Reply w/Quote

dcmidnight
Rookie

offline
Registered: Feb 2004
Local time: 02:44 AM
Location:
Posts: 4

post #3  quote:

The problem here was I forgot I had an outstanding loan that had to be repaid first before anything else. So they still consider that $12000 in income. I just wish there was some way to say hey this was an extremely bad time for me, isnt there something you can work out taxwise?

Old Post 02-05-2004 02:55 PM
Click here to Send dcmidnight a Private Message Find more posts by dcmidnight Add dcmidnight to your buddy list Click Here to Ignore dcmidnight REPORT this Post to a ModeratorNOMINATE this Post for Reward Points Reply w/Quote

Ken NJ
INReview Maven

offline
Registered: Dec 2003
Local time: 09:44 PM
Location: NJ
Posts: 4930

Paul Pays Peter post #4  quote:

Oh, now that would be about $6,000 loan perhaps being tracked down? Sure, they'll work out something with you..... the interest and penalties will just be racking up.... won't put ya in jail I hope.... you can still buy the house. If it's on their books, simply declare that on your lists of creditors to the mortgage company. If it's a judgment, the title company might want you to pay it off or withhold more at your settlement closing. That's how it might work out. You might want to check to see if part of it can be applied to purchase the house. It depends.

Old Post 02-06-2004 01:59 AM
Click here to Send Ken NJ a Private Message Find more posts by Ken NJ Add Ken NJ to your buddy list Click Here to Ignore Ken NJ REPORT this Post to a ModeratorNOMINATE this Post for Reward Points Reply w/Quote

Kookaburra
In the Now Guru

offline
Registered: Jun 2003
Local time: 09:44 PM
Location:
Posts: 2411

post #5  quote:

Did they charge you a huge penalty for early withdrawl?

Old Post 02-06-2004 11:26 PM
Find more posts by Kookaburra Add Kookaburra to your buddy list Click Here to Ignore Kookaburra REPORT this Post to a ModeratorNOMINATE this Post for Reward Points Reply w/Quote

Ken NJ
INReview Maven

offline
Registered: Dec 2003
Local time: 09:44 PM
Location: NJ
Posts: 4930

post #6  quote:

Kooka, generally yes like 15% or something like that unless meets exceptions. Not sure whether first time home buyers would be okay. Someone can look that up for dcmidnight.

Old Post 02-07-2004 04:39 AM
Click here to Send Ken NJ a Private Message Find more posts by Ken NJ Add Ken NJ to your buddy list Click Here to Ignore Ken NJ REPORT this Post to a ModeratorNOMINATE this Post for Reward Points Reply w/Quote

Kookaburra
In the Now Guru

offline
Registered: Jun 2003
Local time: 09:44 PM
Location:
Posts: 2411

post #7  quote:

I think during hardships the IRS will settle for less taxes than owed. You should try to negotiate with them on your tax bill.

Old Post 02-07-2004 02:42 PM
Find more posts by Kookaburra Add Kookaburra to your buddy list Click Here to Ignore Kookaburra REPORT this Post to a ModeratorNOMINATE this Post for Reward Points Reply w/Quote

Ken NJ
INReview Maven

offline
Registered: Dec 2003
Local time: 09:44 PM
Location: NJ
Posts: 4930

Becareful About Those TV Scam Ads post #8  quote:

Unless there are lots of other creditor liabilities along with hundreds of thousands in back taxes..... dcmidnight might be going up a stream. Decisions, decisions, decisions... ante put up $150 and see if they fold. Nah, save your money towards the down payment of the house.

Old Post 02-07-2004 03:05 PM
Click here to Send Ken NJ a Private Message Find more posts by Ken NJ Add Ken NJ to your buddy list Click Here to Ignore Ken NJ REPORT this Post to a ModeratorNOMINATE this Post for Reward Points Reply w/Quote
Time: 02:44 AM Post New Thread   
  Print Version | Email Page | Bookmark | Subscribe to Thread
INReview INReview > The Scuttlebutt Lounge > Politics & Government > Taxes > Cashed out 401k in 03 due to hardship
Search this Thread:
Forum Rules:
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is OFF
vB code is ON
Smilies are ON
[IMG] code is ON
Forum Policies Explained
 
Rate This Thread:

< >

Copyright ?2000 - 2018, Jelsoft Enterprises Limited
Page generated in 0.03838706 seconds (82.94% PHP - 17.06% MySQL) with 34 queries.

ADS

© 2018, INReview.com.   Popular Forums  All Forums   Web Hosting by Psyphire.
INReview.com: Back to Home