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Retirement tax questions
It depends -
If your Form 1099-R does not indicate that it is a qualifying distribution (code "Q" in box 7) but an early distribution (code "J"), then you will be able to indicate that it was for a first time home purchase on a landing screen after the screen where you indicate that the withdrawal was used for something else (See screenshot)
To enter 1099-R information in TurboTax, log into your tax return (for TurboTax Online sign-in, click Here and click on "Take me to my return") type "1099r" in the search bar then select "jump to 1099r". TurboTax will guide you in entering this information.
Roth IRA rules state that a first time homebuyer can withdraw funds from a Roth IRA under the following conditions:
- The account has been open for five years.
- You withdraw $10,000 or less to purchase a home.
- The funds are used directly toward home acquisition (down payment, closing costs, etc.).
If the above criteria are met you can withdraw every last cent of your Roth IRA, up to $10,000, from the account. The $10,000 limit is a lifetime limit, by the way. If the rules are met, the withdrawal will count as a qualified distribution and you will avoid paying income tax and early withdrawal fees.