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Tax Law (Questions About Taxes)/Tax for IRA early withdrawl.



 I have few questions about taxes for early IRA withdrawal. I closed three IRA accounts last year for a home down payment. It was about $15,000 altogether. $5,000 I contributed last year was part of them. I have never claimed that $5,000 contribution to IRA and it was after tax contribution I guess since I deposited that money after I already pay taxes through my pay stubs.

 My question is will I have to pay any tax for that $5,000 even though it was after tax contribution. I heard that I do not need to pay taxes for a after tax contribution.

 I read that upto $10,000 is exempt from any early withdrawal penalty for first home buyers. The bank took penalties even for $10,000 when I withdrew them. Will IRA refund these if I claim them?

 The last question is do I have to make another $5,000 contribution for last year if I want to reduce my tax or will I be able to claim last year's withdrawn $5,000 money for that purpose?



Thanks for your question.

Since you withdrew the $5,000 before the end of the year of the contribution, it is as if it did not happen.  No penalty, and obviously no deduction.

To get a deduction you would have to contribute new money.

You will get a Form 1099-R showing the withdrawal and the funds withheld.  These withheld amounts will be reported on your 1040 as payments, similar to withholding on a pay check.

You will have to complete Form 5329 to avoid any penalties.

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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