My Money Forum

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?

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.

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.

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In addition, there will be a penalty of 10% of the amount withdrawn, which will be $2000, since $20k was withdrawn.

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

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