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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:
- After you have entered all your forms 1099-R, on the summary page Review your 1099-R Info, click Continue
- Follow the interview until you arrive at the page titled Did you use your IRA to pay for any of these expenses?
- Enter the amount of your education expenses in the box next to Higher education and click Continue
- Your early withdrawal penalty will be waived.
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‎February 11, 2021
7:20 AM