IRS allows the portion of early withdrawals from a Simple IRA that are used for medical expenses to be exempted from the 10 percent additional tax payment requirement. Eligible medical expenses include payment of health insurance premiums. But the IRS also says payment of health insurance premiums while unemployed can also be exempt from the additional 10 percent tax. I have been unemployed for six years, and have taken early withdrawals from my IRA for the past three years. On Schedule A, you can only claim the medical expenses that exceed 10 percent of adjusted gross income. I would get a bigger deduction by excluding only the amount I paid for health insurance premiums on Form 5329. I'm thoroughly confused because the IRS and TurboTax have both eligible medical expenses and payment of health insurance premiums while unemployed as exceptions to the additional 10 percent tax. So which exception should I claim?
