Pay My Invoice

10% Tax on Early Distribution

2018- 12/26 Under the tax code, there’s a 10% additional tax on early distributions from an IRA taken before age 59 ½. However, it doesn’t apply to certain distributions, including those used for qualified education expenses. In one case, a taxpayer received $25,622 in early distributions from two IRAs. The IRS determined they were taxable and subject to the 10% penalty. The taxpayer argued the money was exempt because it was used for a child’s college tuition. However, the U.S. Tax Court ruled that the taxpayer didn’t prove the money was used for tuition. (TC Memo 2018-202)

12_26_18_914140522_ftp_560x292_1.jpg

©2019 Bland Garvey CPA