I did a direct 401k rollover to a ira annunity turbo tax wants to tax me for all of it with penalty except 6500. it was all rollover. what gives

What was the code in box 7? And it was a rollover to a Traditional IRA?

If you entered this in the IRA contribution section then REMOVE it.  A rollover is NOT an IRA contribution.

Enter a 1099-R here:

Federal Taxes,
Wages & Income
(I'll choose what I work on - if that screen comes up)
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR  Use the "Tools" menu (if online version left side) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

Answer NO to the two Roth questions and the default is a Traditional IRA rollover.

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]

The box 1 amount will go on the 1040 line 4a with ROLLOVER next to it.

Please ensure you followed these directions on how to enter the 1099R for the rollover from 401k to traditional IRA:

1. Login to your TurboTax Account 
2. Click "Take Me To My Return"
3. Click "Federal" from the left side of your screen
4. Scroll down and click "Start or Edit/Add" next to "IRA, 401(k), Pension Plan Withdrawals (1099-R)" 
5. Answer "Yes" to the question "Did You Have Any of These Types of Income?"
6. Click "I'll Type it Myself"
7. Choose "Form 1099-R, Withdrawal of Money from 401(k) Retirement Plans, Pensions, IRAs, etc." and click "Continue"
8. Enter your 1099-R 
9. Answer questions until "Rollover of 401(k) to Roth 401(k)" and answer "No"
10. On the "Was this Money Rolled Over to a Roth IRA?" screen answer "No"

I saw the same thing and that is what I figured. My question would be, because I just retired in October and did the rollover, when I enter it in the beginning of the return, it almost doubled my income amount. Is this correct? And, am I correct in assuming that even though it shows that, I am not taxed on that as it was a rollover.  The larger amount takes us out of the stimulus bracket...