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Is the box checked indicating it is an IRA/SIMPLE/SEP checked? This box must be checked for the distribution to qualify for the first-time home buyer distribution. Money taken out of a 401(k) does not qualify for this exception.
Continue on after it asks you about a disaster distribution.
You will get to a screen that looks like this:
Thank you for your help - this was a Roth -IRA. So no, the box isn't clicked. I thought it was shared with me when I took the money out that I wouldn't have a penalty since this was a first time home purchase. It also was just my contributions taken out if that helps? I don't see anywhere on Turbotax to share this was a first time home buying option?
Assuming you have entered your 1099R, go to that form. Look at the entries made in the 1099R and make sure you indicate the IRA/Sep/Simple box is checked on the 1099R. It may not be checked on the original forms but this box must be checked so the right questions are asked in the remaining part of the interview.
Also, the distribution code in Box 7 of the 1099R should read Code J-Early Distribution from a Roth IRA. After the 1099R is complete, there will be a question that asks what you did with the money. There will be a screen asking if you purchased your first home with the money. It will look like this.
Note: This screen will only appear if Box 7 has a Code j or T and that the IRA box is checked when you enter the 1099R.
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