Just FYI - if you're under age 59½ when you took the distribution, there's normally a 10% early withdrawal penalty unless you qualify for an exception. You mentioned deferring the penalty, which makes me think you might be planning to use the COVID-related distribution rules, but those have expired. Make sure you understand if you actually qualify for a penalty exception (like using the funds for unreimbursed medical expenses over 7.5% of your AGI or certain first-time home purchases), or if you're going to owe that 10% penalty when you file.

I went through a similar situation last year when I had to withdraw from my 401k due to unexpected medical bills. The good news is that yes, you'll get back the excess withholding if your tax liability ends up being zero after credits. One thing that really helped me was keeping detailed records of everything - the 1099-R form you'll get from your 401k administrator, any hardship documentation, and records of the withholding amounts. When I filed my return, the 20% they withheld was treated exactly like regular payroll withholding - it's just money already paid toward your tax bill. Since you mentioned you'll be in the lowest tax bracket and qualify for earned income credit and child tax credits, there's a very good chance you'll get most or all of that withholding back. Just make sure to double-check that foundation repair qualifies as a valid hardship reason with your plan administrator to avoid any issues with the early withdrawal penalty later. The whole process was much more straightforward than I expected once I understood that withholding is just a prepayment, not your final tax amount.

can anyone clarify if i should be answering "yes" or "no" when turbotax asks if i have "earned income"? my only income is SSDI but i get so confused by these questions. last year i said yes and i got rejected for eitc, but from what everyone is saying here, maybe i should have said no??

This is such a common source of confusion! I went through the exact same thing with my spouse's SSDI benefits. What really helped me understand it was thinking of it this way: the Earned Income Tax Credit is specifically designed to supplement income from WORK - that's why it's called "earned" income credit. SSDI, while it's taxable income that goes on your tax return, isn't something you "earned" through current work activity. It's a disability benefit based on your past work history. So for EITC purposes, it doesn't count as earned income at all. The good news is that if you only have SSDI and no other earned income, you unfortunately won't qualify for EITC since you need at least some earned income to claim it. But if you have even a small amount of earned income from work alongside the SSDI, the SSDI won't count against you when calculating your EITC eligibility - only your work income matters for that calculation. It might be worth checking if you qualified for EITC in previous years when you had any work income, since this is such a commonly misunderstood rule!

This thread has been incredibly educational! As someone new to ROBS structures, I'm realizing there are so many compliance layers beyond just the Schedule G reporting. Between the corporate tax reporting (Schedule G), retirement plan compliance (Form 5500), annual appraisals, and ERISA fiduciary requirements, it seems like ROBS clients need ongoing specialized attention. For practitioners like myself who are just starting to encounter these structures, what would you recommend as the best resources to get up to speed on all these requirements? Are there any CPE courses or publications that specifically cover the intersection of corporate tax, retirement plan, and ERISA compliance for ROBS arrangements? Also, when you're taking on a new ROBS client, what's your typical process for ensuring you've identified all the potential compliance obligations upfront? It seems like there could be significant liability if you miss any of these requirements.

As someone who's dealt with several ROBS structures over the years, I want to emphasize that proper documentation is absolutely critical for Schedule G compliance. Make sure you have clear documentation showing the chain of ownership from the individuals through the retirement plan to the corporation. I always request copies of the plan documents, trust agreements, and any amendments to verify the beneficial ownership structure. Sometimes the original ROBS setup documents don't clearly establish the individuals' control over the plan, which can create ambiguity for Schedule G reporting purposes. Also, don't forget to consider state law implications - some states have additional reporting requirements for corporations with retirement plan ownership that could affect your federal reporting positions. The intersection of federal tax law, ERISA, and state corporate law in ROBS structures can get quite complex, so thorough documentation upfront saves headaches later.

I'm experiencing the exact same issue! Been trying since yesterday afternoon and keep getting error messages or the system just freezes during login. Really frustrating since I had my whole weekend planned around getting this done. What's particularly annoying is that this seems to happen every year during peak filing season. You'd think the IRS would have learned by now to scale up their server capacity during March and April when everyone is scrambling to file. I've tried all the usual troubleshooting - different browsers, clearing cache, different devices - nothing works. At this point I'm pretty convinced it's on their end, not ours. Thanks for posting this because at least now I know I'm not going crazy! Going to try the suggestion about accessing during off-peak hours, maybe very early tomorrow morning. If that doesn't work, I might have to bite the bullet and use a paid service this year, which is really annoying since FFFF has worked fine for me in previous years.

I'm having the exact same problem! Been trying to access Free File Fillable Forms since yesterday and getting nothing but error messages and loading screen freezes. Really glad I found this thread because I was starting to think it was just my setup. Like many of you, I specifically planned this weekend to get my taxes done, and this outage is really throwing a wrench in my plans. I've tried all the usual fixes - different browsers, clearing cache, even tried from my phone's hotspot thinking it might be my home internet. Nothing works. Based on what everyone's sharing here, it sounds like this is definitely a system-wide issue on the IRS end. The fact that some people are occasionally getting through but most aren't suggests their servers are probably overwhelmed or they're having intermittent technical problems. I think I'm going to try the suggestion about accessing during very early morning hours when traffic is lighter. If that doesn't work by Monday, I might have to consider one of the paid alternatives people mentioned, though I really hate having to pay for tax software when the free government option should be working. Thanks everyone for sharing your experiences - at least we know we're not alone in this!

Has anyone used TurboTax to estimate this? I'm in a similar situation (59.5 years old) and wondering if their tax calculator is accurate for IRA distributions.

One thing I haven't seen mentioned yet is the timing of your withdrawal within the tax year. Since you're considering this for your daughter's house down payment, you might want to coordinate the timing with her closing date. If you can delay the distribution until early 2026, you'd defer the tax impact by a full year, which could give you more time to plan and potentially make estimated quarterly payments to avoid underpayment penalties. On the flip side, if tax rates change or your income situation shifts next year, taking it in 2025 might be better. Also, have you considered if your daughter might qualify for any first-time homebuyer programs that could reduce how much she needs for the down payment? Some state and local programs offer assistance that could let you take a smaller distribution and reduce your tax hit.