How does a 1099 form work? ?
So I got a new job last year and wasn’t able to transfer my 403b over to the new employer. That being said I took the hit & cashed out the amount I had early, I know they penalize with a 10% fee anyways before a certain age. I thought when I started it I opted to have it pre-taxed but I guess not because when I got paperwork to withdraw it I selected yet again to have it pre-taxed before I received it. It was only about 7,000 so when I received the amount of 5,900 I figured something wasn’t right because they should’ve definitely taken out more than that in taxes. I’m just curious if anyone has any knowledge if I’m going to have to pay more for taxes on it this year now when I file? I haven’t received any paperwork for it yet but I wanted to get an idea. Thanks for any answers! I’m only 22 & don’t much about it haha.
- RichardLv 71 month ago
$7000 is not much? When I was your age, I put $6000 into a mutual fund and then left it alone, and today it is worth more than $800,000! (I am 76 and now a multimillionaire because I understood how money grows.)
- JudyLv 71 month ago
pretax mans you did NOT pay tax when you put it in. You'll pay the regular tax on it now, plus the 10% penalty for taking it out early. You could have rolled it over into an IRA, but have to do it within 60 days of taking the money out.
- StephenWeinsteinLv 71 month ago
If there is still time, you should transfer it to an IRA so that you can avoid the tax and penalty. (To completely avoid it, you have to put in the entire amount that had been in the 403b, in other words, $7000, not just the $5900 that you received.)
If you have missed the deadline for that option, then you will have to pay taxes on it. However, the amount of tax depends on how much other income you also had in the same year.
- JohnLv 61 month ago
Your employer didn't withhold income tax. Your the employer sends a 1099 to the IRS telling them. Obama wanted to 1099 coin collectors and sellers but the Democratic Party said no. FDR was a coin collector.
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- princess pounderLv 71 month ago
Withdraws were exempt from the 10 percent penalty as part of the covid relief law. However, it may be that the penalty is waived only if you put it back within 3 years or they will tax you later. you really need to talk to a tax person about this.