29 Oct Will I have to pay taxes twice on this retirement withdrawal?

Q. If you’re over 60 and you take a withdrawal from a retirement account, say $20,000, 20% is automatically withheld for taxes. Where are those monies reported on your tax form because the total amount reported to IRS is the total amount of the withdrawal and it doesn’t show that taxes were already deducted. Will I have to pay taxes on this again because it doesn’t show on the form?
— Taxed enough

A. You won’t have to pay taxes twice on this withdrawal.

When federal income tax is withheld on a retirement plan distribution, it is reported on Form 1099-R, said Neil Becourtney, a certified public accountant and tax partner with CohnReznick in Holmdel.

In your situation, you received $16,000 after the $4,000 of federal tax was withheld, he said.

“Assuming you did not roll over the distribution within 60 days, which would make the distribution nontaxable, you will report the $20,000 of income on your 2020 federal income tax return, and you will claim credit for the $4,000 of tax withheld,” he said.

This is no different from receiving gross wages of $20,000 and having $4,000 withheld by the employer, Becourtney said.

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This story was originally published on Oct. 29, 2020.

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