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IRA Early Distribution Codes for First Time home buyer - Form 5329

Forum|Forum|6 years ago
January 16, 2020
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If I have a an early distribution from my traditional IRA that is exempt because I'm a first time home buyer, does TurbotTax automatically create a Form 5329 upon submitting my taxes. Also, what codes should I use in TurboTax since my 1099 has a code 1, but when I go through the questions, it doesn't ask me anything about first time home purchase.

Best answer by dmertz

TurboTax will automatically prepare Form 5329 claiming a code 09 exception on line 2 when you enter a code 1 Form 1099-R from a traditional IRA and you indicate that some or all of the distribution was used to purchase a first home. In the follow-up to entering the Form 1099-R details, be sure to indicate the amount that was applied to your first-home purchase.

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dmertzAnswer

Employee

TurboTax will automatically prepare Form 5329 claiming a code 09 exception on line 2 when you enter a code 1 Form 1099-R from a traditional IRA and you indicate that some or all of the distribution was used to purchase a first home. In the follow-up to entering the Form 1099-R details, be sure to indicate the amount that was applied to your first-home purchase.

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bamartindale87Author

@dmertz I thought for first time home buyer a code J was needed. On my 1099 they defaulted a code 1 in box 7, but told me it can be changed based on what it was used for. Which code should I be using in that box? I thought TurboTax said use code J here and when I did that, I was asked about first time home buying. When I first tried to use code 1, I didn't get any questions about first time home buying and I saw where they immediately took taxes and penalty out of my return.