The interview questions regarding exceptions to the penalty for an Early Withdrawal from an IRA appear after you have entered all Forms 1099-R. If you didn't see these questions, please review the coding on your 1099-R and the steps to report this in TurboTax.
Form 1099-R is entered under
-
Federal Taxes (Personal in Home & Business)
-
Wages & Income (Personal Income in Home & Business)
-
Retirement Plans and Social
Security
- IRA, 401(k), Pension Plan Withdrawals (1099-R)
(You can also find this by searching on "1099-r" and clicking the "jump to link" to go directly to the start of this topic.)
Check the code in Box 7 of your 1099-R: the code "1" for early distribution, no known exception will trigger the questions about how you used the distributed funds (see screenshot #1 below - click to enlarge). When you finish entering this 1099-MISC, you should see the page titled "About the Money You Took Out of This Account" (screenshot #2). Continue to the list of all 1099-R's.
When you are finished entering all 1099-R forms, click Continue. You should see the page titled "Let's See If We Can Lower Your Tax Bill" (screenshot #3). Continue until you see the page that asks you how you used the funds from your IRA (screenshot #4).
Enter the amount you used for education expenses in the related box and continue. The next screen should say "Good News..." This indicates that you are eligible to waive the 10% early withdrawal penalty.
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