I need to enter the 10% penalty for taking an early withdrawal from my traditional IRA but TurboTax Premier won't let me enter just the penalty. I don't have additional tax to pay because I've lost income in the IRA per my cost basis.

[Angelbaby]

I need to enter the 10% penalty for taking an early withdrawal from my traditional IRA but TurboTax Premier won't let me enter just the penalty. I don't have additional tax to pay because I've lost income in the IRA per my cost basis. Can TurboTax pleased fix this?  I overrode Form 5329 to include the penalty but now I can't eFile.

[DoninGA]

When you enter the Form 1099-R in TurboTax and you have a 10% early withdrawal penalty based on the code in box 7, the TurboTax program will have the penalty entered on your federal tax return, Form 1040, as a tax liability.  You do not enter anything in regards to the penalty, it is all done by the software.

[Angelbaby]

Thank you, DoninGA. However, the only way I can pay the 10% penalty currently with TurboTax premier is to also pay additional tax (which isn’t due). All I need to pay is my 10% penalty. I’ve kept my forms 8606 throughout the tax years. My IRA lost income over all these years and I do not owe additional tax based on my IRA cost basis. I need TurboTax premiere to fix this issue so I can e-file.

[dmertz · Accepted solution]

The 10% early-distribution penalty only applies to taxable traditional IRA distributions.  If your traditional IRA distribution was nontaxable because your basis in nondeductible traditional IRA contribution was more than the amount of the distribution plus the value of your traditional IRAs at year end, there is no penalty.

[Angelbaby]

Fantastic, thank you!