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Tax Law (Questions About Taxes)/Early distribution of 401k and IRA


We file a married/joint return.  We live in California and this is for the 2012 returns.

A 401k was dissolved due to job loss and the balance rolled into an IRA but the 401k account had outstanding loans against it.  This totaled +/- $18,000 in loan repayments which were reported as a distribution.

Once enrolled in the new IRA(s) we took an additional $15000 to pay medical expenses, health insurance premiums and my daughter's college tuition.  

What documents must be provided in support/evidence of these line items?  If you could address each, qualified education expenses (other than the 1098T sent by the institution#, medical expenses and health insurance premiums, it would be GREATLY appreciated.  Currently facing $5200 in penalties...UGH. As a working class four member family collecting only unemployment income and with two in college we can hardly afford these penalties.

The university did send a 1098T#?)reporting amount "billed" which doesn't total what was paid.  Does the IRS have privy to the details of the amount on the 1098T?  What other documents can be used?  And do they need to be attached to the return?


Thanks for your question.

You do not have to provide any evidence in support of the items when you file your return. However, you should keep a record of them in case the IRS makes an inquiry regarding one or more of the items.  Keep the paid medical bills and evidence of payment; keep a copy of the record of the insurance payments; keep the 1098-T and your evidence of payment.

The IRS does not have any additional information regarding the 1098-T, just what the university puts on the form.  You can use the amount billed or paid, but be consistent between years.

Hope this helps.

John Stancil, CPA  

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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