What would you like to do?

Do you have to pay taxes on a 401k if you take the money out to reinvest in a home?

already exists.

Would you like to merge this question into it?

already exists as an alternate of this question.

Would you like to make it the primary and merge this question into it?

exists and is an alternate of .

Because the money in your 401(k) has never been subject to income tax, all withdrawals for any reason will be taxed as ordinary income. Furthermore, if you take a premature (generally, under age 59 1/2) distribution from your 401(k) to purchase a home, the distribution will additionally be subject to a 10% penalty tax. You make take an early distribution of up to $10,000 from an IRA to pay qualified acquisition costs to purchase, build, or rebuild a first home without incurring the 10% penalty tax. The distribution will still be subject to income tax. http://www.irs.gov/publications/p590/ch01.html#d0e8323 First Time Home Buyer Tax Credit If you purchased a home for your principal residence after April 8, 2008 and before July 1, 2009, you may be eligible for a First Time Home Buyer Tax Credit of up to $7,500 for your 2008 tax return. To be eligible for the credit, you must not have owned a home as a principal residence in the previous 3 years. http://www.efile.com/tax-deduction/income-deduction/home-deductions.asp
2 people found this useful
Thanks for the feedback!

Is it best to put money into 401K and pay taxes at earned income rates or pay taxes up front and pay capital gains and dividend rates?

There are a few different ways to answer this question. * First, it matters whether or not your employer matches any of your 401(k) contributions. Ninety percent of employers

Can you take money out of your 401k after you file bankruptcy?

  Answer   Yes, but not until your discharge. If you take money out of a 401K after you file and before discharge, the money is no longer exempt and could be taken b

In a 401k when you eventually pay taxes which taxes do you pay?

Distributions from your 401K after you reach your retirement age the taxable amount will be subject to federal income tax at your marginal tax rate and may be subject to some

How old do you have to be to take money out of 401k?

You can take money out of a 401k if you leave the company, your employer dissolves the plan, you qualify for a limited number of hardship exceptions, or you reach the "retirem

When do you pay the taxes if you tax out money from a 401k?

You can have some income tax withheld from the distribution amount are you can choose to make some quartely estimated tax payments or you can wait until you file your income t

Do you pay taxes on 401k?

Generally, your contributions aren't taxed (put in before taxes), and your withdrawals are taxed.

Do you have to pay tax on money you save at home?

  When you first get money, if it is from a taxable source, you pay tax on it no matter where you plan to keep the money. Just because you plan to keep it at home doesn't

Do you pay taxes on 401k withholdings?

By withholding I will guess that you mean the amounts that you are contributing to your 401K BEFORE income taxes (deferred compensation amount) that will not be subject to the

Can you take your 401k and invest it in your home tax free?

NO. The taxable amount of any distributions from your 401K will be added to all of your worldwide gross income and be subject to the federal income tax at your marginal tax ra

Can you borrow money against your 401k if you are in bankruptcy to pay off your taxes?