If your Roth IRA meets the 5-year rule* and the withdrawal was used for qualified education expenses, you shouldn't owe any additional taxes or penalties. Here's how to handle this in TurboTax:
- Sign into TurboTax for link in step 2 to work
- Click on 1099-R."
- Continue Through the Questions: After entering your 1099-R information, continue through the questions until you reach the screen that asks, "Did you use your IRA to pay for any of these expenses?"
- Select Higher Education: On this screen, you can enter the amount of your distribution used for higher education expenses. This will help TurboTax apply the exemption for the 10% early withdrawal penalty.
*If your Roth IRA has been open for at least five years and the withdrawal was used for qualified education expenses, TurboTax should show zero penalties and no additional taxes. However, if you haven't met the 5-year rule, you may have to pay taxes on the earnings, but you can still be exempt from the 10% penalty for early withdrawal.
For more details on the 5-year rule, you can check out this Fidelity article
