What is the name of your state? CA
I have $6K in a former employer's 401K plan.
I owe $5K+ to the IRS for 1996/97 taxes.
I'm current on taxes now and expect to receive a refund (at least on paper) next year.
If I cash out the 401K to pay the IRS bill I know the $6K becomes taxable income but won't it balance out because I can deduct taxes paid on previous years?
I am so sick of the watching the interest add up and can't afford to make payments monthly to outweigh the interest. I'm thinking pulling the money out of the 401k to get the monkey off my back may be the best thing...even with the 10% penalty.
Any advice?
I have $6K in a former employer's 401K plan.
I owe $5K+ to the IRS for 1996/97 taxes.
I'm current on taxes now and expect to receive a refund (at least on paper) next year.
If I cash out the 401K to pay the IRS bill I know the $6K becomes taxable income but won't it balance out because I can deduct taxes paid on previous years?
I am so sick of the watching the interest add up and can't afford to make payments monthly to outweigh the interest. I'm thinking pulling the money out of the 401k to get the monkey off my back may be the best thing...even with the 10% penalty.
Any advice?