I understand you're in a tough spot, but I'd really encourage you to step back and consider if this is the right move. Even though your employer doesn't require documentation, the IRS still has the final say on what qualifies as a hardship withdrawal, and car loan payments typically don't make the cut unless you're facing imminent repossession that would prevent you from working. Here's what I'd suggest before touching your 401k: Contact your car lender immediately to discuss options - many will work with you on payment deferrals, loan modifications, or extended payment plans, especially if you explain your situation. Also look into refinancing with a credit union, which often offers better rates and terms than traditional lenders. If you absolutely must access retirement funds, consider if your plan allows 401k loans instead (I know you mentioned you're maxed out, but sometimes there are different loan categories). The interest you pay goes back to your own account, and there's no penalty or tax consequences if you repay on time. The math is sobering - that $14,500 withdrawal will cost you roughly $16,000-18,000 after taxes and penalties, plus you lose decades of compound growth. That same amount could be worth $80,000+ by retirement age. If you do move forward despite these risks, document everything showing this withdrawal addresses an immediate and heavy financial need, not just convenience. Keep records of any repossession threats, proof you need the car for work, and evidence you explored all other options first.

I've been following this thread and wanted to add some perspective from someone who works in retirement plan administration. The key issue everyone's touching on is that the IRS has a two-part test for hardship withdrawals: 1) immediate and heavy financial need, and 2) the withdrawal amount doesn't exceed what's necessary to meet that need. While paying off a car loan generally doesn't qualify, there are situations where it might - specifically if you're facing imminent repossession and can demonstrate that losing the vehicle would create severe hardship (like being unable to work, get medical care, etc.). The documentation would need to show the immediate threat and why alternative solutions aren't viable. That said, I'd strongly echo the advice about exploring refinancing first. Many lenders will work with borrowers facing hardship - payment deferrals, term extensions, or even principal reductions in some cases. Credit unions are especially good at this. The long-term cost of the 401k withdrawal (taxes, penalties, plus lost growth) will likely far exceed any savings from paying off the loan early. If you do proceed, keep meticulous records showing: the immediate financial crisis, why the car is essential, what alternatives you explored, and any repossession threats. Even though your employer doesn't require documentation, the IRS might during an audit, and you want to be prepared to justify this as a legitimate hardship rather than just debt consolidation.

I went through this exact same situation a couple years ago and it was incredibly stressful until I figured out the right approach. The good news is you're absolutely correct - you should NOT be paying taxes on your entire $6,745 distribution. Here's what worked for me: In your tax software, look specifically for the IRA distribution section and make sure it's asking about your "basis" or "nondeductible contributions." You need to tell the software that you have $6,500 in contribution basis that's already been taxed. This is crucial because the software has no way of knowing this from just the 1099-R alone. Once you input that basis amount, the software should automatically calculate that only your earnings ($245) are subject to regular income tax. The distribution code J means you qualify for an exception to the 10% early withdrawal penalty - likely due to medical expenses based on what you mentioned. Don't skip Form 8606 Part III even if your tax software tries to - this form is what officially documents your basis and protects you from being double-taxed on future distributions. I learned this the hard way when I almost filed without it. One last tip: double-check with your IRA custodian that they have the correct contribution records on file. Sometimes there can be reporting discrepancies that cause headaches later. Better to catch any issues now before you file!

This thread has been incredibly helpful! I'm a tax preparer and see this exact confusion every single tax season. You're absolutely right to question why you'd owe taxes on the entire distribution - that would indeed be double taxation on your contributions. The key point everyone has correctly identified is Form 8606 Part III. This form is essential because it establishes your "basis" in the Roth IRA (the $6,500 you contributed with after-tax dollars). Without this form, the IRS has no way of knowing that portion was already taxed. A few additional considerations for your specific situation: 1. Since you mentioned this was for medical expenses, make sure your tax software applies the penalty exception correctly. The code J confirms an exception applies, but you want to verify it's calculating no 10% penalty on the $245 earnings portion. 2. Keep detailed records of this transaction. The IRS uses a "first-in, first-out" rule for Roth distributions, so this withdrawal reduces your contribution basis for any future distributions. 3. If you recontribute to a Roth IRA in the future, remember that you'll need to rebuild that contribution basis before any future withdrawals would be completely tax-free. The bottom line: only the $245 in earnings should be taxable income, with no penalty due to your medical expense exception. Don't let the software intimidate you into paying tax on money you've already been taxed on!

This thread has been absolutely invaluable! I'm currently dealing with the exact same issue - $112k in RSU withholdings from Fidelity that aren't showing up on my W2. After reading through everyone's experiences, I have a much clearer roadmap for tracking down this missing documentation. I'm particularly interested in trying the tax account transcript approach that Javier mentioned, since that would give me direct confirmation from the IRS that they received the withholding. Has anyone had experience with how long it typically takes for the transcript to reflect brokerage withholdings? I'm wondering if there's a processing delay I should account for. Also, I noticed several people mentioned success with contacting stock plan administrators directly rather than going through regular HR channels. For those who tried this approach, did you find the administrator's tax support team was more knowledgeable about these specific RSU withholding issues compared to general HR representatives? One thing I'm planning to do based on Joshua's advice is set up better tracking for next year's RSU vestings. This annual scramble to find tax documents is way too stressful, especially when we're talking about six-figure withholding amounts! Thanks again to everyone who shared their solutions - this community knowledge is so much more practical than anything I found in official tax guides.

This thread has been incredibly helpful for understanding RSU withholding issues! As someone new to receiving stock compensation, I had no idea this was such a widespread problem. I'm currently in my first year of RSU vestings and want to make sure I don't run into this same situation next tax season. Based on all the great advice shared here, I'm planning to: 1. Set up quarterly tracking like Joshua suggested, documenting each vesting event and where the withholding gets reported 2. Create that dedicated email folder for all RSU communications 3. Identify my company's stock plan administrator contact info now, before I need it 4. Take screenshots of my account right after each vesting as Gianni recommended One question for the group - for those who successfully resolved their missing withholding documentation, what's the best way to verify that everything is correctly reported when you actually file your return? I want to make sure I don't accidentally double-count or miss anything when the time comes. Also, is there a particular time of year when it's best to do a "mid-year check" on RSU withholdings to catch any reporting issues before they become tax season problems? Thanks to everyone who shared their experiences - this is exactly the kind of real-world guidance that makes navigating stock compensation so much easier!

I'm confused about job-related training deductions in general. Are they still deductible for employees after the tax law changes? I thought most job expenses went away unless you're self-employed?

Great point about the 1099 vs W-2 distinction! Since you mentioned you're a "security contractor," that suggests you might be getting 1099s rather than W-2s, which would make this deduction potentially viable on Schedule C as a business expense. However, even for contractors, the expense still needs to meet the "ordinary and necessary" test for your security business. The IRS looks at whether the expense is common and accepted in your trade, and whether it's helpful and appropriate for your business. If you are indeed a 1099 contractor, you'd want to document how the karate training specifically enhances your security services - maybe it allows you to take on higher-risk assignments, charge premium rates, or fulfill specific client requirements. Keep detailed records of how the skills directly apply to your contract work, not just general fitness or self-improvement. What's your employment classification? That'll determine whether this is even worth pursuing.

As someone who completed this exact transaction with my S-Corp about 6 months ago, I can confirm that 70% business use is definitely worthwhile! The general rule of thumb my CPA gave me is that anything above 50% business use makes the actual expense method potentially beneficial, but the higher the percentage, the more attractive it becomes. Regarding the spreadsheet tracking, I update mine weekly rather than monthly - it only takes about 10 minutes and keeps everything fresh in my memory. I track mileage, fuel receipts, maintenance costs, and loan payments all in one sheet with separate tabs for each category. The key is being consistent with whatever schedule you choose. For business credit, the vehicle loan actually helped my business credit profile! Since it's secured debt with regular monthly payments, it demonstrates good payment history to credit agencies. Just make sure the loan is properly reported under your business EIN rather than your personal SSN. One thing I wish I'd known upfront - consider timing this transaction at the beginning of your business fiscal year to maximize that first year's depreciation benefits. I did mine mid-year and missed out on some potential deductions. The complexity really isn't that bad once you get into a routine. The tax savings have been substantial enough that I'm planning to do the same thing with a second vehicle I use for business. Just stay organized and document everything!

This thread has been absolutely invaluable! I'm a new S-Corp owner and was completely unaware of this vehicle transfer strategy until I stumbled across this discussion. The level of detail and real-world experiences shared here has been incredible. I'm definitely planning to move forward with transferring my personal vehicle to my business after reading through all these insights. My situation is very similar to the original poster - I have a paid-off vehicle worth about $22k that I use roughly 75% for business purposes. A few key takeaways that really stood out to me: - The importance of proper documentation (fair market valuation, formal agreements, board resolutions) - Using current AFR rates for the promissory note - The potential for insurance savings when switching to commercial coverage - The need for meticulous mileage tracking with apps like MileIQ - Timing the transfer at the beginning of the tax year for maximum depreciation benefits One question I still have - for those who've been through an audit, how detailed did the IRS get when reviewing this type of transaction? I want to make sure I'm preparing the right level of documentation upfront rather than scrambling later if questioned. Also, has anyone dealt with financing the purchase through a business line of credit rather than owner financing? I'm curious if that creates any additional complications or benefits. Thanks again to everyone who shared their experiences - this community is amazing!