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February 5, 2022
Question

Purchased a house in June then took money out of my IRA in October because we were still struggling after the down payment. Can I claim first-time home buyer for my IRA?

  • February 5, 2022
  • 1 reply
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1 reply

February 5, 2022

No, you can only avoid the 10% early withdrawal penalty if you withdrew funds to buy your first home (up to $10,000) but not for other expenses. Please see IRS First home for the requirements. If you withdrew funds that meet the requirements then please follow these instructions (they still can be taxable income):

  1. Login to your TurboTax Account 
  2. Click on the "Search" on the top and type “1099-R”
  3. Click on “Jump to 1099-R”  and enter your 1099-R
  4. Click "continue" after all 1099-R are entered and answer all the questions.
  5. Continue until "Did you use your IRA to pay for any of these expenses?" screen (this screen won't come up if you only withdrew your contributions) and enter the amount under First Home purchase (up to $10,000).

 

Please be aware, if you withdrew the funds from a Roth IRA then you can withdraw contributions you made to your Roth IRA anytime, tax- and penalty-free. Only the earnings will be taxable. Please answer all follow-up questions carefully and make sure to enter net contributions prior to 2021 on the "Enter Prior Year Roth IRA Contributions" screen.

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Employee
February 5, 2022

No, the distribution must taken shortly ahead of time and be used to pay qualified acquisition costs at closing .

Not for general expenses after the fact.