No, the money you took out of an IRA for a down payment is not deductible. If you took money from a traditional IRA before you turned 59 1/2 you get an exception to the 10% early withdrawal penalty. The money is still all taxable income. You will add the 1099R for that to your tax return.
To enter your retirement income, Go to Federal> Wages and Income>Retirement Plans and Social Security>IRA 401 k) Pension Plan Withdrawals to enter your 1099R.
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