Question

If my only income was a lump-sum early withdrawal of my 401(k) plan and SSDI, do I have to file taxes?

Answer

Maybe. If your taxable income is high enough, you’ll have to file.

You will be responsible for the taxes on your 401k early withdrawal. Also, depending on the size of your 401(k) distribution, some of your Social Security Disability Income (SSDI) might be taxable.

If your income isn’t high enough to file, you must still file Form 5329 to pay the 10% early distribution tax on your 401(k) withdrawal. This penalty will apply unless you meet a Form 5329 exception. You might qualify for an exception if you took the distribution because you were totally and permanently disabled.

 

Related Topics

Related Resources

IRS Letter 531 – Notice of Deficiency

The IRS audited your tax return and the changes resulted in additional taxes owed. Learn more about IRS letter 531 from the tax experts at H&R Block.

State Returns and Federal Refunds

Will your federal refund be deposited if your state return is rejected? Learn more from the tax experts at H&R Block.

IRS Manager Conference

Get the facts about IRS manager conferences, which may allow you and the IRS to come to an agreement, but remember to protect your appeal rights.

IRS Letter 313C – Federal Tax Deposit Penalty Proposal

Learn more about letter 313C and how to handle an IRS failure to deposit penalty with help from the tax experts at H&R Block.