What would the taxes and penalties be on an $8,000.00 withdrawal from a 401K in California?
Answer:
First you have to pay federal ordinary tax, so it depends on what tax bracket you're in
0 - $15k - 10%
$15k - $28k - 15%
and so on up to 38%
Then there is the 10% penalty of $8,000.
Then you have to pay California income tax, so that's another 5% - and if you're in one of the cities with tax, you have to pay that too.
So, you will probably pay $4,000 in taxes for an $8,000 withdrawal - I'm sure there is a less expensive way for you to get $4k.
20%
If you are staying with thejob you may want to consider taking a loan against the balance. You are entitled to borrow half your balance in the 401K.
With that said;
The penalties for the withdrawl is 10% = 800.00.
The income tax is the rate based on your combined annual income plus the 8K. I.e if your annual income is 24,000 and you withdraw 8,000 then your rate is based on the 32,000. The rate also depends on the number of dependents, how you file: married, single, jointly, etc.
You will be able to deduct the penalties form your gorss income (double check onthis) As for California the income would also be reportable, if I am not mistaken, California follows the same income tax guidelenins as the IRS. The taxes paid to the IRS on the 8K would also be deductible form CA tax (also double check on this).
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