Dear Sir,

I was 59-1/2 + in May 2008 when was laid off from my Job. Just before that my wife had a stroke and she was in emergency care for couple of months.
I had two grown up kids dependent on me beside my wife. I got the 401K plan rolled over to IRA roll over plan of American Century in May 2008.
I took all the money ($43000.00) out to meet my wife’s treatment and other family hardship liabilities. I spent hospital expenses, insurance bills, my daughter college fees and cost of lab. Testing and other family expenses. I withhold 20% for federal taxes before distribution.
I have received unemployment compensations for about 8 months before I got a job in Jan 2009.
At the time of my laid off I had unpaid 401K loan of $20000.00 which was also rolled over to American Century.

Should I need to pay taxes on 43000 + 20000 or there are some tax benefits I can get since I was unemployed and spent hundreds of dollars on Medical Insurance and on my Wife’s treatment.
I used to file form 1040 jointly with my wife; she is not an earning member.

Please advice, Thanks