Get your taxes done using TurboTax
@scuba_climber wrote:
Thanks again for your very helpful advice,
I have one more question:
I needed to make this withdrawal because I contributed the full amount for 2020 and subsequently lost my job due to the pandemic. This reduced my earned income for the year to an amount less than the yearly maximum contribution that I had already made. Now, as I enter the 1099-R information into TurboTax, I am being asked if I used the money to pay for health insurance premiums while unemployed. This situation does apply to me, though I'm not sure that this deduction is meant to count against earnings on excess withdrawals. Can I take this deduction or should I leave the field blank?
thank you
If you are referring to this screen then this is the IRS rule in Pub 590-B
https://www.irs.gov/publications/p590b#en_US_2019_publink1000231064
Even if you are under age 59½, you may not have to pay the 10% additional tax on distributions during the year that aren't more than the amount you paid during the year for medical insurance for yourself, your spouse, and your dependents. You won't have to pay the tax on these amounts if all of the following conditions apply.
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You lost your job.
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You received unemployment compensation paid under any federal or state law for 12 consecutive weeks because you lost your job.
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You receive the distributions during either the year you received the unemployment compensation or the following year.
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You receive the distributions no later than 60 days after you have been reemployed.
