Tax reform is about simplifying the tax code and lowering taxes on beneficial activities while reducing tax leakages, or loss of revenue, and raising taxes on harmful activities. Hereâs what TRAIN does towards that end. First, the reform increases the income tax exemption threshold and adjusts the income tax rates and tax brackets to ensure that Filipinos will have higher disposable income. It is a realization that the economy cannot grow and prosper by squeezing out taxes from the middle class.
Withdrawing your earnings is a different matter. Any money in a withdrawal that exceeds the amount of your original contributions is considered âearningsâ and is subject to possible penalties and taxes. The penalty for early withdrawal of earnings, except under certain specified conditions, is 10 percent of the earnings that you withdrew. In addition, you may have to pay income taxes on those withdrawals.
Although the IRS imposes the 10% early withdrawal penalty to dissuade IRA participants from using their savings before retirement, this penalty is only applied to the withdrawal of taxable funds. If you withdraw funds that are not subject to income tax, there is no penalty for distributions taken at any time.: With a few exceptions, early withdrawals from traditional or Roth IRAs generally incur a tax penalty equal to 10% of the taxable amount. To calculate the penalty on an early withdrawal, simply multiply the taxable distribution amount by 10%.