Move My Realty - Real Estate News

Can't avoid tax on early 401(k) pay

Dear Dr. Don,
I recently had to take $4,800 from my 401(k) retirement account. It was a hardship withdrawal. I paid 10 percent tax on it right away. I understand that I could be taxed an additional 10 percent for an early withdrawal made before age 59½. I am hoping that I won't have to pay income taxes when it comes time.

I make $43,000 annually for my full-time job. I do independent contract work that amounts to about $5,100 annually and have a part-time job that pays about $1,100 annually. I am single, so I claim no one on my taxes. I'm not sure if you can tell me anything. I am trying to prepare if I do have to pay taxes on the withdrawal.
-- DL Taxes

Buyers Remain Largely in the Driver's Seat
Homebuyers continue to drive hard bargains, holding down prices while allowing properties to sit on the market for an increasing length of time, according to Zillow.com’s market report.

Nationwide, buyers paid 3.3 percent, or nearly $7,039, less than the last listing price on homes for sale during the month of July. That is a slight improvement over June, when the discount was 3.5 percent and significantly less than the 4.6 percent discount in January.

Meanwhile, 22.8 percent of all homes listed for sale on Zillow had at least one listing price reduction as of Sept. 1. The median U.S. price reduction was 6.5 percent off the original listing price. Homes listed for sale on Zillow during August were listed for a median 96 days, up from 91 in July.

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Home Buyer Tax Credit Countdown Begins

The first-time home buyers tax credit ends Nov. 30. Is it possible to buy in the next two weeks and still close in time to collect it?

Some professionals say yes. “It still can be done in six weeks," says RE/MAX Town & Country associate Lynn Ayers in West Chester, Pa.

Economist Kevin Gillen of Econsult predicts a mad rush to close as the deadline nears.

Bruce Hahn, president of the American Homeowners Grassroots Alliance in Arlington, Va., is pushing for an extension and an expansion of the credit.

Legislation to do that is critical, he says, because the recovery has so far been mostly jobless and people need more time to get their feet on the ground in order to buy.

Source: Philadelphia Inquirer, Alan J. Heavens (08/31/2009)