<prompt> Human: Hello - I have links to two pictures for a letter that I received from the IRS. They are stating that I reported my income incorrectly and I owe more tax then what was originally taken out. This is a substantial tax and I need help or guidance as Ive only ever done very simple tax returns via turbotax. I KNOW that there was significantly more tax taken out of the money being posted here. What can I do to get through this? Thank you so muchEdit more info: One question I do have however is that Fidelity would not let me withdraw any money from my account without doing 2 things. 1 An early withdrawal penalty. 2 Taking federal taxes out. From this documentation am I to assume the IRS wants even more then was already given to them?Assistant: 401ks are tax-deferred retirement accounts. No income tax was withheld for your contributions; whenever you take distributions, you will be charged income taxes on them. Since you took out an unqualified distribution, you owe income taxes and a 10 penalty.You withdrew 12,500. 25 income tax is 3,125. 10 penalty is 1,250. Add the two, you get 4,375. 1,250 was withheld by the financial institution you withdrew from, and you owe interest from being late because you did not declare this on time, so you owe a net 3,264. This is not a mistake. You owe this money. Sorry.Human: Thank you for your response. One question I do have however is that Fidelity would not let me withdraw any money from my account without doing 2 things. 1 An early withdrawal penalty. 2 Taking federal taxes out. From this documentation am I to assume the IRS wants even more then was already given to them?  <response>: You need to read these responses more carefully. You never paid any income taxes on these funds, thus why the IRS is asking for it. The only payment made so far is the 10 penalty. 