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Why Didn't TurboTax Premier 2023 Apply the 10% Penalty for My Early Withdrawal from Traditional IRA?

Forum|Forum|2 years ago
February 4, 2024
2 replies
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I lost money in my traditional IRA so I didn't have any income to report for it for 2023. However, I did take an early distribution. TurboTax Premier didn't apply the 10% early withdrawal tax penalty. Who can I contact to fix this?

Best answer by Angelbaby

Hi! I did get a 1099R and it listed code 1. I didn’t take any taxes out when I took the distribution. I’m 51. I submitted a similar question on this forum and received the following response from another Level 15 member:

The 10% early-distribution penalty only applies to taxable IRA distributions. If your traditional IRA distribution was nontaxable because your basis in nondeductible traditional IRA contribution was more than the amount of the distribution plus the value of your traditional IRAs at year end, there is no penalty.

B

BillM223

Please see "Retirement topics: Exceptions to tax on early distributions" and look for exceptions to early distribution penalties for IRAs (middle column). Do any of these apply to you.

Also, how old are you?

Also, also, "I lost money in my traditional IRA so I didn't have any income to report for it for 2023." You don't report gains or losses in your IRA unless you close the account.

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A

AngelbabyAuthor

Hi! I’m 51 and none of the exceptions apply to me. I did get a reply from a Level 15 member to another post I made on the same topic. His reply was:

The 10% early-distribution penalty only applies to taxable IRA distributions. If your traditional IRA distribution was nontaxable because your basis in nondeductible traditional IRA contribution was more than the amount of the distribution plus the value of your traditional IRAs at year end, there is no penalty.

VolvoGirl

Employee

Did you get a 1099R for it? What code is in box 7? Check your birthdate under My Info. Are you married? Be sure to enter the 1099R under your name. It doesn't show the 10% penalty on your return 1040 line 23 (from schedule 2 line 6)?

A

AngelbabyAuthorAnswer

Hi! I did get a 1099R and it listed code 1. I didn’t take any taxes out when I took the distribution. I’m 51. I submitted a similar question on this forum and received the following response from another Level 15 member:

The 10% early-distribution penalty only applies to taxable IRA distributions. If your traditional IRA distribution was nontaxable because your basis in nondeductible traditional IRA contribution was more than the amount of the distribution plus the value of your traditional IRAs at year end, there is no penalty.