who to go to for taxes? (insurance, retirement plan, accountant, credit)

[zilam98]

last fall, i had to withdraw my 401k since i had to leave my work in US for three months and return to my home country since i had to wait for my visa to be extended--all that while continuing to pay for my car, insurance and rent til the end of the contract. now, im trying to determine which tax companies would do the best job of helping me file my taxes without costing me so much for their services?

i just got back to work a little over a month ago. there are the mom and pop services here along with the chain ones. is there any rule of thumb i can use as a guide to pick one? last year i just filed my taxes online myself since my situation was very straightforward. this time, i dont want to end up making mistakes with that 401k withdrawal.

[keyman51]

Check with any CPA who does this for a living. Do not go to the chain services. I have found out that they tend to overcharge those that have more than a standard tax form.

[sware2cod]

If you go to a CPA (Certified Public Accountant), get an estimate for what they will charge. Someone on here was billed over $500 for having a CPA do basic income tax returns.

FYI. You can go it IRS.GOV and download forms/instructions on how to handle your 401K withdrawal. It's quite easy...there are a few lines on the 1040 form where you write down the 401k withdrawal info. You can read the instructions and they explain how to fill out the form when you withdrew 401K money.

There are some exemptions where you might not have to pay the 10% withdrawal penalty if you are under 59.5 years old. The instructions clearly explain what the exemptions are, and how to fill out the form if you qualify for them.

Since you did your taxes on your own last year, this extra step might take you an hour extra to read the instructions and to fully understand how to fill out your tax return for your 401K withdrawal.

Then it doesn't cost you anything.

I fill out my own tax forms every year and use the IRS instructions and forms.

The 10% penalty for early 401K withdrawal goes on Form 1040, Line 59. You also need to pay income taxes on the money that was withdrawn.1040 Line 15a is where you put the amt of your 401k withdrawal, and line 15b is where you put the amt of the withdrawal that is subject to income taxes(The same amt goes on line 15a & 15b in your case).

It's possible that the income taxes were already deducted when the 401k company sent you the withdrawal money. If so, the 1099R that you receive from the 401K company will specify the amt of income taxes that were deducted. If none were taken out, it will specify this also. If they took out income taxes, make sure you have the amt of taxes they took out included on Form 1040, Line 62, so you get credit for those taxes that were already paid. This is the same line that gets the Federal Taxes paid that comes from your W2 from your employer. You add them together...taxes paid from 1099-R(401k withdrawal) + Federal taxes paid from W2.

You might need to fill out form 5329. The instructions explain the exemptions and tell you whether you need to fill out this form or not.
Link to Form 5329. http://www.irs.gov/pub/irs-pdf/f5329.pdf
Link the Instructions for Form 5329: http://www.irs.gov/pub/irs-pdf/i5329.pdf

Link to Instructions for Form 1040: http://www.irs.gov/pub/irs-pdf/i1040.pdf
Link to Form 1040: http://www.irs.gov/pub/irs-pdf/f1040.pdf

Here is a link to general rules that explain exemptions to the 10% penalty

Tax Topics - Topic 558 Additional Tax on Early Distributions from Retirement Plans, Other Than IRAs

[zilam98]

Originally Posted by sware2cod

If you go to a CPA (Certified Public Accountant), get an estimate for what they will charge. Someone on here was billed over $500 for having a CPA do basic income tax returns.

FYI. You can go it IRS.GOV and download forms/instructions on how to handle your 401K withdrawal. It's quite easy...there are a few lines on the 1040 form where you write down the 401k withdrawal info. You can read the instructions and they explain how to fill out the form when you withdrew 401K money.

There are some exemptions where you might not have to pay the 10% withdrawal penalty if you are under 59.5 years old. The instructions clearly explain what the exemptions are, and how to fill out the form if you qualify for them.

Since you did your taxes on your own last year, this extra step might take you an hour extra to read the instructions and to fully understand how to fill out your tax return for your 401K withdrawal.

Then it doesn't cost you anything.

I fill out my own tax forms every year and use the IRS instructions and forms.

The 10% penalty for early 401K withdrawal goes on Form 1040, Line 59. You also need to pay income taxes on the money that was withdrawn.1040 Line 15a is where you put the amt of your 401k withdrawal, and line 15b is where you put the amt of the withdrawal that is subject to income taxes(The same amt goes on line 15a & 15b in your case).

It's possible that the income taxes were already deducted when the 401k company sent you the withdrawal money. If so, the 1099R that you receive from the 401K company will specify the amt of income taxes that were deducted. If none were taken out, it will specify this also. If they took out income taxes, make sure you have the amt of taxes they took out included on Form 1040, Line 62, so you get credit for those taxes that were already paid. This is the same line that gets the Federal Taxes paid that comes from your W2 from your employer. You add them together...taxes paid from 1099-R(401k withdrawal) + Federal taxes paid from W2.

You might need to fill out form 5329. The instructions explain the exemptions and tell you whether you need to fill out this form or not.
Link to Form 5329. http://www.irs.gov/pub/irs-pdf/f5329.pdf
Link the Instructions for Form 5329: http://www.irs.gov/pub/irs-pdf/i5329.pdf

Link to Instructions for Form 1040: http://www.irs.gov/pub/irs-pdf/i1040.pdf
Link to Form 1040: http://www.irs.gov/pub/irs-pdf/f1040.pdf

Here is a link to general rules that explain exemptions to the 10% penalty

Tax Topics - Topic 558 Additional Tax on Early Distributions from Retirement Plans, Other Than IRAs

does Line 4 (federal income tax witheld) on form 1099-R indicate the amount of income tax deducted from my 401k? is it the same amount i should indicate on Line 62 of form 1040?

i just wanted to make sure

[zilam98]

i have two form 1099-R's because i withdrew the amount i rolled over from my previous employer before i took out the rest of my 401k. shall i use two form 1040s for each 1099? if not, how shall i put in the amounts and the 10% penalties for each on one 1040 form?