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Posted by Arthur Kamlet on June 21, 2008, 2:40 pm
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>If you withdraw IRA or Roth funds early can you offset penalty payment
>with previously accumulated loss carry forwards
Not directly.
Or if you prefer: Maybe.
When you file form 1040 you calculate your income tax and also several
other federal taxes including self employment tax and excise taxes on
early IRA distributions.
Your total tax bill or refund is the combination of all these taxes.
So if you have an early distribution excise tax to pay, you could lower
your total tax bill by reducing income tax. In your case, NOLs might
or might not lower income to the point where income tax would be lowered.
In the case where NOLs lower adjusted gross income, but due
to credits and/or deductions and/or exemptions you had no income
tax, the NOL will not help your total tax bill. The excise tax still
has to be paid even if there is zero income tax.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
--
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