@QRFMTOA After looking at this more thoroughly, leave this as a Code J. After I responded initially, i realized that the IRS will only waive an early withdrawal penalty for a First Time Purchase for $10,000. Since you took a $12,000, you will be assessed an early withdrawal penalty of $200 for the additional $2000 amount over the $10,000 limit for first time homebuyers.
When you enter your $12,000 distribution as a code J, the program will ask you a series of questions. Stay in this section until you are completely done. When you get to your 1099R summary, press continue at the bottom.
Work through the series of questions until you get to the screen that says let's see if we can reduce your early withdrawal penalty. Next the program will ask If You Used your IRA to pay Any of These Expenses. Here you will record the First Time home purchase up to $10,000. After you finish this section, Turbo Tax will inform you that will have a $200 early withdrawal penalty based on that excess amount of $2000.
If you use a code T, then the program will assume you have a known exception but will ignore the fact that this is a First Time Homebuyer Distribution. If the IRS discovers this mistake, it could be costly later on in the future. We want to avoid this from happening.
Do not apologize for being a retentive. I consider myself one with great pride.
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