turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

Tax Penalty on withdrawing more the 10k from IRA to for down payment for first-time home buyer

My understanding is that my wife and I can each withdraw up to $10,000 from my IRA to pay for the down payment on a house without the 10% tax penalty from the IRS since we are first time homebuyers. If we decide to withdraw $50,000, then would we be charged the the 10% penalty on $30,000 (50k minus 10k minus another 10k) or would we be charged the penalty for all $50,000? 

5 Replies

Tax Penalty on withdrawing more the 10k from IRA to for down payment for first-time home buyer

Just on the 30,000.  But it will still all be taxable.  And will push you into a higher tax bracket.  So be careful.  You can lose like 50% of it or more for Federal and state taxes and penalties.  

Tax Penalty on withdrawing more the 10k from IRA to for down payment for first-time home buyer

Does it matter whether or not I withdrawal the $20k separately than the remaining amount, or can I just withdrawal all $50k and the government would still only charge me tax on the $30k?

Tax Penalty on withdrawing more the 10k from IRA to for down payment for first-time home buyer

No you can take it all at once.  You will each get one 1099R at the end of the year for the total you took out.  

For IRS regulations, a "first time" home buyer is someone who did not own or co-own the home they lived in as their main residence at any time in the 2 year period prior to the closing on the new home.

 

Also, you must withdraw the money before you close, and you must close within 120 days of withdrawing the money.  If you withdraw after you close, or it takes more than 120 to close after withdrawing, it won't qualify for the penalty exemption. 

 

Also See Opus 17 answers on this one

https://ttlc.intuit.com/community/taxes/discussion/ira-withdraw-for-first-time-home-purchase/00/2377...

 

and See IRS publication 590B for IRA Distributions

https://www.irs.gov/pub/irs-pdf/p590b.pdf

 

 

Tax Penalty on withdrawing more the 10k from IRA to for down payment for first-time home buyer

@taxesarecomplicated - please be sure to read the linked thread.  What isn't clear from your post is that the $10,000 has to be taken from EACH IRA.  You can't take $20,000 from ONE IRA and avoid the 10% penalty for being a first time buyer even thought you are filing joint.  Each spouse would need to withdraw $10,000 from their respective IRAs to avoid the 10% on $20,000

Tax Penalty on withdrawing more the 10k from IRA to for down payment for first-time home buyer

You can't both withdraw from "my" IRA.   Adam can withdraw up to $10,000 from Adam's IRA, and Eve can withdraw up to $10,000 from Eve's IRA, and avoid the 10% penalty on early withdrawals.  But the exemption is $10,000 per person, even if you are married, so if only Adam has an IRA, Adam's limit is $10,000 even if Adam is married and files a joint return.

 

All amounts withdrawn from a traditional IRA are subject to regular income tax, and any amount more than $10,000 per account will be assessed the additional 10% penalty.

Use your Intuit Account to sign in to TurboTax.
By selecting Sign in, you agree to our Terms and acknowledge our Privacy Statement.
message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
message box icon

Ready to start your taxes?

Hand off your taxes, get expert help, or do it yourself.

See Pricing

Related Content

Manage cookies