I took an early distribution to purchase a home in 2025, but the purchase was closed in Jan 2026. Can I get the tax break in 2025.

[DawnC]

Maybe.  If it was from an IRA and you closed within 120 days of the distribution (up to $10k), there is no penalty.

The IRA distribution must be used to buy, build, or rebuild a home within 120 days of the distribution to qualify.   401K withdraws do not allow the exemption; it is only IRA accounts.  

Exceptions to early withdraw penalty

[jorge-e-lopez-11]

I used it in roughley 32 days and it was from an IRA. But I did the withdraw in 2025 and did the purchase in 2026 so I want to make sure I can claim it in 2025 taxes. I took out 30k, how do I make sure the 10k credit is applied?

Thanks,

Jorge Lopez

[Opus 17]

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@jorge-e-lopez-11 wrote:

I used it in roughley 32 days and it was from an IRA. But I did the withdraw in 2025 and did the purchase in 2026 so I want to make sure I can claim it in 2025 taxes. I took out 30k, how do I make sure the 10k credit is applied?

Thanks,

Jorge Lopez

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Yes, you can claim the exclusion on the first $10,000 even if the transaction straddled the new year.  The withdrawal must be from an IRA (not a qualified workplace plan) and the purchase must be completed within 120 days of making the withdrawal.  Remember, you will owe income tax on the entire amount, and a 10% penalty on everything over $10,000 unless you are older than age 59-1/2.  When you enter the 1099-R for the withdrawal, there will be a followup page of questions that says something like "let's see if you qualify for any special circumstances that will lower your penalty" and there should be a box to check for first time homebuyer. 

[MinhT1]

You would qualify for the $10,000 first home purchase exemption from the 10% early withdrawal penalty. 

In TurboTax Online, enter your form 1099-R, then follow these steps:

1. After you have entered all your forms 1099-R, on the 1099-R summary page, click Done
2. Follow the interview until you arrive at the page titled Let's see if we can lower your tax bill. Click Continue
3. On the next page, click the pen icon next to your name
4. Continue the interview to the page These situations may lower your tax bill
5. Enter the amount of the distribution (up to $10,000) in the box next to First home purchase and click  Continue
6. Your early withdrawal penalty will be waived.