What is federal withholding?

Question

i just got my 401k from my old part time job and i only had about $375 in there and there was about a $75 amount that was in the federal with holding category which wasn't included in the amount i will get back. what will i get back?

Answer 1

When you prepare your tax return, you'll show the $375 withdrawal as income, and tghe $75 as withholding (you'll get a form 1099-R from the 401K trustee for that at the end of the year).

You'll owe income tax on the withdrawal at whatever your rate is, plus if you are under age 59-1/2 you'll owe a 10% penalty, or $37.50, for early withdrawal.  They withheld 20%.  So if your tax bracket is 10%, the withholding will cover your tax including the penalty.  If your bracket is higher, you'll owe some additional tax for the withdrawal - if it's lower than 10%, you'll get some of the withholding refunded.

Answer 2

Once you take a distribution and don't roll the money into an IRA, you have to add it to your taxable income.  The plan admin probably withheld 20%--10% for tax and 10% for penalty.  Usually the amount withheld for tax is too little.

Answer 3

Those were the taxes you paid on that money. If they don't withhold that, you will have to repay that when you file your taxes. I used to be a tax preparer and most of the time people did not withhold taxes on that and ended up owing the IRS big time. You will get back the $300 if only $75 was in the Federal withholding spot.  

Answer 4

Judy is correct.

Answer 5

If you had a balance of $375 and requested a check - you should have asked that no Tax be withheld.

If they withheld $75 - your check will only be $300.

Answer 6

That was the taxes you paid on the money.