Cashing 401K and taxes

En Español

You aren't signed in
(sign in)

I cashed in my 401K to move and buy a house in another state, can I claim my down payment on my return to help. I paid the ...

Posted by Parle-G 1 year ago

See original question | Add your answer

Answer 1 out of 1

Tracy L. Coenen

137 answers

24 helpful answers

Tracy L. Coenen is WalletPop's Tax Expert and Fraud Expert

Your down payment on a house is not a deductible item on your tax return.

When you withdrew your money from your 401(K), there was a certain amount withheld from that distribution toward the taxes you will owe. But it may not be enough to cover all the income taxes and the 10% penalty, so you should be aware that you may still owe money. I typically advise taxpayers that about 50% of their total distribution will end up being paid in taxes and penalties. So look at how much was withheld from your gross distribution to help estimate how much you might still owe. (Also consider that if you usually get a refund when you file your taxes each year, that amount will be applied against what you owe on the distribution.)

Paying off credit card debts with your 401(k) money will not affect your taxes. You don't get any benefit on the taxes from paying off credit cards.

Posted 1 year ago

In reply to Parle-G's question