BarryP wrote:Question on ‘tax liability’ on line 46; I’m not recommending this to anyone--- can that tax liability be raised by taking some money out of a 401K before age 59-1/2? Since 20% Fed tax is taken plus a 10% penalty, does that mean the 30% will appear as tax liability for ‘line 46’?
(disclosure: I'm not a CPA or tax attorney, but...)
You're thinking about doing what I did with my 2011 tax year. I purchased my Nissan LEAF on 02/11/2011 and installed a PV solar panel array at my home in 2011. Both of those actions gave me tax credits ($7,500 for the car and about $4,500 for the solar system). Also, I retired at 55 years old in 2011 and took out big chunk from my 403 account.
If the 2013 return is like the 2011 return, you compute your tax, then subtract your tax credit (from form 8936), then add the additional tax on the qualified retirement plan. This result is your total tax. So, tax on your withdrawal will be added before you take your EV credit. But any early withdrawal penalty will come in after the EV credit.
tax: line 46
EV credit: line 53
tax: line 54
additional tax on early withdrawal: line 58
total tax: line 61
BTW, the rules about the 10% early withdrawal penalty are complex and in some cases, you are not subject to it, even when you think you are. In my case, I didn't have to pay it, even though I took the withdrawal at age 55.
Hope this helps. Again, I'm not a professional and I do my own research.