MinhT1
Expert Alumni

Retirement tax questions

Your distribution is fully taxable. Your can ask your IRA administrator to withhold federal and state taxes so that you do not have a large tax bill at tax rate (and possibly an underpayment penalty).

 

If you are aged under 59 1/2, only the early withdrawal penalty of 10% is waived on the portion used for higher education.

 

In fact, if you have qualified education expenses, your early IRA distribution is exempted from the 10% penalty up to the amount of these expenses.

 

Please read this TurboTax Help topic.

 

In TurboTax, to obtain the exemption please follow these steps:

  1. After you have entered all your forms 1099-R, on the summary page Review your 1099-R Info, click Continue
  2. Follow the interview until you arrive at the page titled Did you use your IRA to pay for any of these expenses?
  3. Enter the amount of your education expenses in the box next to Higher education and click Continue
  4. Your early withdrawal penalty will be waived.
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