401k rollover to traditional IRA then withdrawal from traditional IRA

[selenaz]

I rolled over $9000 from 401k to a traditional IRA account (both different companies) then I withdrew that $9000 to help pay for mortgage down payment as a first time homebuyer.  I got two 1099Rs from the different retirement companies.  I entered both into the retirement forms and they are counted double as $18,000 withdrawal, one taxable (IRA withdrawal) and the other non-taxable (rollover).  Shouldn't it only count once in the total of $9000.  How can Turbotax calculate this as one amount, what do I need to do differently?  Please advise. Thanks.

[DawnC · Accepted solution]

It sounds like it is correct.  The rollover is not taxable.  The IRA withdrawal is taxable.  If this was a first time home purchase, then the penalty is waived.  You still have to pay the ordinary income tax on the disbursement, but the 10% penalty is waived.   When you look at your Form 1040, you should see $18K is retirement income, but only $9K on the taxable line, which sounds like what you described above.  There should be no penalty for either transaction.  

[selenaz]

I'm just confused on why it is counted as added income ($18,000) to my total income when the real amount is only $9000?

I'm assuming line 8b on the 1040 excludes the rollover as income?

[BillM223 · Accepted solution]

Line 4a on the 1040 should show $9,000 and so should line 4b (note: other amounts may be included if you had other IRA distributions, so the $9,000 is the minimum). ALSO NOTE: because of the weird IRS instructions, the amount in 4a may be zero or blank. As long as the $9,000 shows up in 4b, this is correct.

Line 4c should show the $9,000 401(k) distribution. Line 4d show not show the $9,000 because a rollover is not taxable (again, if you had other pension or annuity distributions, they will be added to these two lines).

Only the IRA's $9,000 should appear in line 8b, your Adjusted Gross Income.

If 4d includes the $9,000, then you need to return to the 1099-R interview and make sure that you indicated that this event was a rollover.

[selenaz]

thank you so much for the clarification