The difference is probably your conversion.
Roth distributions of your own prior contributions are never taxable and a Traditional IRA conversion 5 years ago is the same as a contribution. As long as you (and your spouse) did not withdraw more than your prior contribution then nothing would be taxable (or penalty) at all. Only a distribution of earnings is taxable and subject to a penalty. When entering the first time home home buyers exemption do not enter the amount of your own contributions that were withdrawn (those are automatically not subject to the penalty), only enter the amount of earnings (that are subject to the penalty).
For example:
Only the earnings will contribute to the $10,000 limit which means that if you have a Roth that contains $50,000 and $40,000 are Traditional IRA conversions or direct contributions and $10,000 is earnings, you can withdraw all $50,000 and the $10,000 exemption would only apply to the earnings so there would be no tax or penalties. You only enter the $10,000 earnings in the interview for the exemption amount, not the entire $50,000 amount.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
