Form 843 - Request for Abatement

[pacoford]

My client withdrew a large amount of his retirement resulting in his taxable income being taxed at a much higher rate (24% vs.10%). The reason he withdrew was due to hardship his family was experiencing. He did not have any knowledge or idea of the repercussions and only requested 20% to be withheld. He now owes $82,000+ in addition to what was already paid in 2023. This does not include the tax due for the state. 

Reflecting on anyone's experience, would my client's situation be a legitimate reason that the IRS would honor an abatement request upon filing Form 843?

Thank you in advance for any advice or information.

[Terry53029]

Form 843 is not used for retirement funds. The funds from a retirement fund are going to be taxed if not a ROTH. You may be able to request an exception for the 10% penalty if he is under 59 1/2 depending on what kind of retirement fund.

[qbteachmt]

You didn't give details that matter: age of the taxpayer, if this is a retirement plan account through an employer, or a personal retirement account, or what type. Also, you mention he asked for 20% withholding. It's only the tax table next bracket difference that is taxed at 24%. Not his entire taxable income. That's a difference of 4%, if all the distribution falls into the next tax bracket, so perhaps he's been underwithheld all along. You can't really ask for abatement for taxes owed. Perhaps you are asking about penalty? Have you seen this table? You might want to bookmark it:

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-o...