How much do you get taxed on taking out money from your IRA early?

How much do you get taxed on taking out money from your IRA early?

Postby kari69 » Sun Apr 10, 2011 1:34 pm

My husband and myselft took out a total of $20K out of our IRA account this past year and did not pay taxes when it was taken out. How much will I be taxed?
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How much do you get taxed on taking out money from your IRA early?

Postby thurston » Sun Apr 10, 2011 1:35 pm

We don't know.

The IRA is not "ours" as it is tracked by SSN.
Unless an exception is met, if the owner is under 59.5 years of age, a 10% penalty applies.
The tax is based on your total income for the year. Some people with a bunch of kids and no other income would pay $0 in income tax. Others would owe $5000.
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How much do you get taxed on taking out money from your IRA early?

Postby claymore43 » Sun Apr 10, 2011 1:36 pm

WOW, what a mistake!

Taking money out of IRA before age 59 1/2 means you automatically lose 10%. Then you pay tax at your normal rate, 15, 25%, whatever. So you lose a huge chunk and since you chose (!) to have no withholding, this will BITE.
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How much do you get taxed on taking out money from your IRA early?

Postby coletun59 » Sun Apr 10, 2011 1:38 pm

The tax will be however much it would have been if you had gotten the money another way, such as interest from a bank. This may be anywhere from 0% to over 30% depending on how much other income you have and where you live.

In addition, there will be a penalty of 10% of the amount withdrawn, which will be $2000, since $20k was withdrawn.
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How much do you get taxed on taking out money from your IRA early?

Postby burnel20 » Sun Apr 10, 2011 1:40 pm

you will be penalized 10% of the amount for early withdrawal
the amount of income tax will depend on how this impacts your total income
your non taxable income is $18700, married no dependents, thus any excess will be taxable
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How much do you get taxed on taking out money from your IRA early?

Postby aliz30 » Sun Apr 10, 2011 1:42 pm

Be sure to check the exceptions. You may not have to pay the penalty.
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