Home Improvements

[joyapk01]

We have a simple IRA that we want to take money out of to pay for a new roof. How do we record this on our taxes? 

[John-H2021]

Hello,

 Generally, you must pay income tax on any amount you withdraw from your SIMPLE IRA. You may also have to pay an additional tax of 10% or 25% on the amount you withdraw unless you are at least age 59½ or you qualify for another exception.

Additional taxes

• 10% tax
  You have to pay a 10% additional tax on the taxable amount you withdraw from your SIMPLE IRA if you are under age 59½ when you withdraw the money unless you qualify for another exception to this tax. In some cases, this tax is increased to 25%.
   
• 25% tax
  The amount of the additional tax you must pay increases from 10% to 25% if you make the withdrawal within 2 years from when you first participated in your employer's SIMPLE IRA plan.

Exceptions to additional taxes

You don’t have to pay additional taxes if you are age 59½ or older when you withdraw the money from your SIMPLE IRA. You also don’t have to pay additional taxes if, for example:

• Your withdrawal is not more than:
• Your unreimbursed medical expenses that exceed 10% of your adjusted gross income (7.5% if your spouse is age 65 or older),
• Your cost for your medical insurance while unemployed,
• Your qualified higher education expenses, or
• The amount to buy, build or rebuild a first home
• Your withdrawal is in the form of an annuity
• Your withdrawal is a qualified reservist distribution
• You are disabled
• You are the beneficiary of a deceased SIMPLE IRA owner
• The withdrawal is the result of an IRS levy

Here's where to enter your 1099-R in TurboTax:

1. Open or continue your return.
2. In the Federal section, select Wages & Income.
3. Scroll to locate Retirement Plans and Social Security.
4. Select Start or Revisit next to IRA, 401(k), Pension Plan Withdrawals (1099-R).

You can also find the 1099-R section using Search. Open or continue your return in TurboTax by selecting the Continue or Start button on the Tax Home screen, enter 1099-r in the search bar, and select the Jump to 1099-r link.