Borrowing from IRA

[sids_chow]

I borrowed 20K from my IRA for my first home purchase. I understand for the first 10000 I don't have to pay 10% penalty. However since me and my wife are filing jointly do I have to pay penalty for the additional 10K ? My wife has no income. If the answer is 'Yes' how do I do it in Turbo Tax ?

[dmertz · Accepted solution]

You cannot "borrow" from an IRA.  You made a distribution from the IRA.

The $10,000 first-home exception applies to each person's own distributions separately.  Since you took $20,000 from your IRA, only $10,000 is covered by the penalty exception and the other $10,000 is subject to the early-distribution penalty unless an different exception also applies.  Had your wife taken money from her IRA, she would get a separate first-home exception on up to $10,000 of her IRA distribution.