I paid tax on my early 401K distribution at time of withdrawal. Why is turbo tax accessing more tax due because of early distribution

[JulieS]

Yes, you may have an additional 10% tax on this distribution if you are under 59-1/2. Similar to a W-2 form, 1099-R has both the income and the taxes that were withheld on it. 

The amount withheld is just an estimate of the taxes on the distribution, and you may owe more or less when you file your return.

If you took a distribution from your 401(k) before you turned 59 1/2 and did not roll it over, you'll pay a 10% early withdrawal penalty, with a few exceptions:

• Death, or total and permanent disability
• Qualified Domestic Relations Order
• Series of substantially equal periodic payments based on life expectancy
• Dividend pass through from an ESOP
• IRS levy
• Unreimbursed medical expenses that are more than 7.5% of your adjusted gross income
• Certain distributions to qualified military reservists called to active duty
• Separation from service if age requirement is met

Once you enter the distribution information from your 1099-R form, TurboTax will help you check for any exceptions that could reduce the tax
 

[VolvoGirl]

It has to break out and show the 10% Early Withdrawal Penalty separately on your tax return (schedule 2 line 8 which goes to 1040 line 23).  Then you get credit for all the withholding taken out.  

You didn't actually pay the tax or 10% penalty (you pay a 10% early withdrawal penalty if you are under 59 ½).  You had taxes withheld like from your paycheck. You still have to enter the whole gross original amount (before taxes were withheld) with your other income to figure out the total tax (and it may put you into a higher tax bracket) and then the withholding is subtracted from the total tax to figure your refund or tax due. The gross amount shows up,on 1040 line 4a or 5a and the taxable amount on 4b or 5b.  The withholding will show up on 1040 line 25b.