I am unable to enter a distribution from a traditional IRA for first time home purchase. However I am given the option with Roth IRA distribution. Suggestions?

Forum|Forum|2 years ago
January 27, 2024
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TurboTax Deluxe Online

Best answer by DoninGA

With the code of 1 in box 7 that indicates —Early distribution, no known exception (in most cases, under age 59½). So you are liable for the 10% early withdrawal penalty unless you have an exception. And your exception is a first time home purchase.

After entering your 1099-R there are multiple screens to complete.

On the screen labeled Tell us if you moved the money through a rollover or conversion you must select I didn't roll over or convert this money

You should land on a screen labeled Did you use your IRA to pay for any of these expenses? and in the box First home purchase (up to $10,000) enter the amount of the IRA distribution you used for the purchase.

DoninGA

Employee

When you entered your Form 1099-R in the TurboTax program did you indicate that this was an IRA by checking the box labeled IRA/SEP/SIMPLE? And what is the code that was entered in box 7 of the 1099-R?

jchrishallAuthor

Hello! thanks for the quick response.

Box 7 is 1 and IRA/SEP/Simple is checked.

DoninGAAnswer

Employee

After entering your 1099-R there are multiple screens to complete.

On the screen labeled Tell us if you moved the money through a rollover or conversion you must select I didn't roll over or convert this money

dmertz

Employee

Using a traditional IRA distribution for a first-home purchase exempts the distribution (up to $10,000) from the early-distribution penalty but not from the income tax. Click the Continue button on the page that lists the Forms 1099-R that you have entered and proceed to where TurboTax presents a page that asks about exceptions the the early distribution penalty.

Distributions from a Roth IRA are handled differently because under certain circumstances distributions used for a first-home purchase might also be exempt from income tax in addition to being exempt from the early-distribution penalty.