If I take money from my 401(k) and pay taxes on it, do I have to pay taxes on it again
If I take money from my 401(k) and pay taxes on it, do I have to pay taxes on it again and claim it on my income tax
Answers
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do I have to pay taxes twice on my 401(k) if I withdraw
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Hello,
It depends. When you take a distribution from your 401(k), they usually withhold some taxes from it to help cover the amount of taxes you will owe on that income when you file your tax return.
In my experience, it's usually about 20% and not quite enough to cover the amount you will owe (depending on what bracket you are in) so most people do end up owing additional taxes when they file. You will need to claim it on your tax return and you will see if you will owe additional taxes. There are situations where you may not owe additional taxes because you qualify for enough other credits or deductions to reduce the taxable amount.
Please note as well that if you are under the age of 59 1/2, you may be subject to an Early Withdrawal penalty which is 10% on top of the income tax you will owe. There are exceptions to this though.
