I withdrew $18,000 to buy a home in CA. I make 44k gross a year. I am so worried about how much I will have to pay in taxes for this withdrawal.
If you are under age 59 1/2, you will be hit with the 10% tax penalty for early withdrawal. That's $1,800 before any state and federal tax on the entire $44,000 as ordinary income. No one can tell you how much tax that will be based on the extremely limited information you gave. There's more to it than just your income. But I would figure on at least 15% federal and another 5% – 8% for state.
If you borrowed the money from your 401k and pay it back gradually, there are no taxes or penalty.
Federal Taxes – This withdrawal will probably bump you up into the 25% bracket. Some some will be taxed at 15% and some at 25%.
Federal Penalty – 10% (The exception to the 10% penalty only applies to IRAs and not 401ks)
State Taxes – Similarly, some at 2% and some at 4%.
State Penalty – 2.5%
So, all in all, about a 38% effective tax rate ($18,000 x .38 = $6840)
You will pay a ten percent withdrawal penalty and then the money will be added to ordinary income for taxes so yes, you will owe $35% to 45% on the withdrawal and probably more because of state taxes.
You should be worried. It is rarely a smart move. The penalty is 10% for federal and 2.5% for CA. In addition to this, it can put you in a higher tax bracket and you will pay a higher federal and state tax in addition to the penalties. I hope you had enough withholdings during the year to cover it. If you owe 1k or more at tax time there is a penalty for owing too much.
Figure 15-25% for federal tax, 6-9.3% for state tax, 10% for premature withdrawal penalty, 30-45% total.
the 18k will be taxed as ordinary income AND a 10% penalty may be due as well.
you'd have done better to borrow the money from your 401k if the mortgage lender would permit
instead of income of $44K you now have income of $62K, and taxes appropriate to your rate schedule