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dcmidnight
Rookie
offline
Registered: Feb 2004
Local time: 02:15 AM
Location:
Posts: 4
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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
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02-05-2004 04:19 AM
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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.