Don't give it away...You've worked hard, you've saved your pennies, and now you have a nice chunk of change in the form of a 401k, an IRA, or a pension fund. Maybe you're saving this money for a rainy day, a new home, or as a way to spend your golden years the way you want to. But before you make plans to enjoy that hard earned money, Uncle Sam wants his cut.

The IRS tooth fairy...Many people are under the misconception that when they cash out one of these accounts the taxes are automatically taken out. The IRS wants you to keep believing in that misconception because that's how they get you. Here comes the pain...When you withdraw money from a 401k or an IRA you usually have a 10% early withdrawal penalty. On top of that you need to expect to pay 30% in taxes on that money. So when withdrawing your money, take into account that you're only going to get 60% of the total withdrawal amount. For example, say you have $100,000 in a 401k. You take out the $100,000, but you should only expect to net $60,000.

Whoops...Don't make the mistake that so many others do. Don't spend all the money. Because when tax time comes around, an IRS-Hitman will come to get his cut.

Here's how it works. When you withdraw the money you have to pay the IRS for all the taxes that have accrued. On top of that because the money you took out is considered gross income, you're going to be in a higher tax bracket which means you may owe the IRS for both the investment account and your adjusted income.

How it all goes wrong...For the sake of argument let's say you spent that money to buy a boat, and go on a little vacation. You used up all $100,000 thinking that you already had the taxes taken out. Well now it's tax time and the IRS is telling you that you have a $30,000 debt.

Now what can you do? Read the IRS-Hitman's follow up:

Pay Your Due to the IRS part 2 to get the smoking gun.

I'm Richard Close and I was a "Hit-Man" for the IRS. I took out anyone who owed the IRS money as my father had before me. Now I help thousands of Americans beat Uncle Sam and save thousands of dollars. Tax problems? Contact me and get free tips and techniques to deal with wage and bank seizures and slash tax debt: email me at IRS-Hitman@taxdefensenetwork.com or call 1-888-248-9058. Visit me http://irs-hitman.blogspot.com or http://www.taxdefensenetwork.com

Source: www.articlesbase.com