Im trying to get a head start on my taxes. Last year I had to take out money from an old 401K. It was not a lot only a few thounsand. When I took it out it asked my how much I wanted to pay in federal and state taxes. I put 10% in federal and put 0% (I live in CA and could no find anything on paying a early penalty withdrawal for this state ). I got a form in the mail saying "Combined Tax Statement for forms 1098,1099,5498"
I only show me how much I had left in total NOT how much it was left after the 10% was taken out.
For example if I made last year $40K and had deposited $5K (with the 10% already taken out) from the early withdrawal, my total taxable income would be $45K. How does the IRS know that I paid the 10% on the early withdrawal so they dont try and take the 10% out again?
Sorry if it sounds confusing... But I want to make sure I dont get in trouble with the IRS..