Tax Question

Discussion in 'UPS Discussions' started by grgrcr88, Feb 6, 2010.

  1. grgrcr88

    grgrcr88 No It's not green grocer!

    I am doing my taxes online and usually it wil guide me thru everything easily, this year I have a question I cannot find the answer to.

    My wife took an early withdrawal from an IRA, I know there is a 10% tax penalty for this, but it seems if you use it for college tuition, you do not have to pay the penalty.

    My question is, not all of the money has been used for tuition in 2009, but it all will be used for tuition in the future. Do I get to include the total amount as exempt from penalty or only the amount used in 2009 for tuition.

    Thanks to whoever may be able to help me out.
  2. cachsux

    cachsux Wah

    Possibly as a one time exemption for 2009 but no longer on the next years taxes.
  3. dannyboy

    dannyboy From the promised LAND

    you must use up or put the money where you intend within the year you withdraw it, other wise, the 10% penalty will apply.

    if you withdraw it, and intend to roll it over into an ira, you must do it within that tax year i believe, or within a calendar year otherwise you get to pay taxes.

    usually they have to with hold the tax, plus income tax on the distribution if it is sent to you, so that hurts like heck if you are trying to roll it over. because its like 50%.

  4. Dustyroads

    Dustyroads New Member

    i believe dannyboy is correct on this one, you must use the money in the year you receive it, and likewise, the roll over must happen in the same tax year. It is a 10% penalty off the top in addition to any tax you may have to pay on capital gains.
  5. bluehdmc

    bluehdmc Well-Known Member

    It used to be you only had 60 days for a rollover. If they were limiting you to the tax year you recieved it, essentially you could withdraw it in Jan and use it for a "loan" as long as you got it in by Dec.
  6. Dustyroads

    Dustyroads New Member

    I checked with my cpa who is cooking in the kitchen, she said that the 60 day window for a roll over is correct, and that in fact you should just roll it over directly to avoid the withholding to be taken out.
  7. 1989

    1989 Well-Known Member

    Cookin' the books eh?
  8. satellitedriver

    satellitedriver Moderator Staff Member

  9. Dustyroads

    Dustyroads New Member

    i married up.
  10. grgrcr88

    grgrcr88 No It's not green grocer!

    What if I am not rolling it into anything. I am using it to pay my wifes college tuition. Does it all still have to be used in the tax year? Can I put what I did spend on tuition in that tax year as not penalized?