The 10% penalty may not apply (see notes below) but there will be ordinary income tax on the amount taken out and you will get credit for amount paid ($772 and $350).
You will entire the 1099R exactly as you have received it.
Make sure the tax payments are entered. TurboTax will initially show the 10% early withdrawal penalty until you get to the exceptions area and enter the amount of money that was used for the purchase of the home. If it is less than the $7,720, you will have a 10% on the amount not applied to the home purchase.
After you are finished entering this TurboTax will have determined the correct tax on the withdrawal and given you credit for the amount of taxes withheld.
To enter or edit the 1099R go to:
1099R
To enter pension and annuity
Payments (1099-R)
- Click on Federal Taxes (Personal using Home and
Business)
- Click on Wages and Income (Personal Income using Home
and Business)
- Click on I'll choose what I work on (if shown)
- Scroll down to Retirement Plans and Social Security
- On IRA, 401(k), Pension Plan Withdrawals (1099-R),
click the start or update button
- keep going and you will get to screen on exceptions to the 10% penalty.
What are the tax consequences when I withdraw amounts from my SIMPLE IRA?
Generally, the same tax results apply to distributions from a SIMPLE IRA as to distributions from a regular IRA. However, a special rule applies to a distribution received from a SIMPLE IRA during the 2-year period beginning on the date on which you first participated in your employer’s SIMPLE IRA plan. Under this special rule, if the additional income tax on early distributions applies to a distribution within this 2-year period, then the rate of additional tax under this special rule is increased from 10 percent to 25 percent. If one of the exceptions to application of the early distribution tax under section 72(t) applies (for example, for amounts paid after age 59 1/2, after death, or as part of a series of substantially equal payments), the exception also applies to distributions within the 2-year period and the 25-percent additional tax does not apply.
Source: https://www.irs.gov/retirement-plans/simple-ira-plan-faqs-distributions
