After you enter the distribution information from your 1099-R form, TurboTax will have subsequent questions so you can indicate the the distribution was used to pay an IRS levy.
- On the Let's see if we can reduce your early withdrawal penalty screen, select Continue.
- On the Identify the Plan screen, select IRA and Continue.
- On the Did you use your IRA to pay for any of these expenses? screen, scroll down to IRS levy, enter the amount and Continue.
- You should get a message Looks like your early withdrawal is tax free. Select Continue.
Unless you qualify for an exception, you’ll pay a 10% additional tax penalty on the taxable amount of early distributions from an IRA (traditional or Roth) before reaching age 59 1/2.
There are exceptions to the 10% tax penalty for early distributions:
- Death or total and permanent disability
- Series of substantially equal periodic payments based on life expectancy
- Qualified first-time homebuyer distributions up to $10,000
- Qualified higher-education expenses
- Certain medical insurance premiums paid while unemployed
- Unreimbursed medical expenses that are more than a certain amount of your adjusted gross income
- IRS levy
- Certain distributions to qualified military reservists called to active duty
- Beneficiary of a deceased IRA Owner
- Qualified Birth or Adoption costs
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