Yes, it must be reported, and is likely taxable for Federal (if a Traditional IRA), plus subject to an additional 10% penalty for early withdrawal, plus state taxes as applicable. Enter the 1099-R here:
Federal > Wages and Income > Retirement.
This an expensive way to buy property.
Possibly, if you've had the account for more than 5 years, you won't be subject to taxes or penalties when withdrawing earnings for a first-time home purchase (up to $10,000). Distributions above that are taxable. You will have to report the distribution on your tax return.
Here's how to enter your 1099-R in TurboTax:
- Open (continue) your return, if you don't already have it open
- Locate the Search bar by the magnifying glass icon. Search for 1099-R and select the Jump to link in the search results
- Answer Yes on the Did you get a 1099-R? screen
- If you land on the Review your 1099-R info screen instead, select Add Another 1099-R
- Answer any questions until you get to the screen Let's import your tax info. Here you can choose how you want to enter your 1099-R:
- If your financial institution is a TurboTax 1099 partner, you can import your form. Select your institution from the list and enter your sign-in credentials, then select Get my form to start the import process
- If you prefer to upload your 1099-R or type in the info yourself, select Change how I enter my form. On the next screen, select your preferred entry method
- Continue answering the questions to enter or review the info from your 1099-R
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