I took part of 401k withdrawal to pay college tuition, how do I show it in turbo tax

[Chapin1963]

I withdrew money from my 401k and part of it was used to pay college tuition for one of my sons.  In order to lower the early withdrawal 10% fee, I would like to enter this amount somewhere.

Also, for some reason, turbo tax shows my younger son, a junior undergraduate, has already taken the four years allowed for the American Opportunity Credit.  I have already deleted his information and re-entered it, but keep showing the same, which is not allowing the $2,500 credit.

[Opus 17 · Accepted solution]

Withdrawals from a 401(k) to pay for education expenses are NOT eligible for the exception to the 10% penalty.  The exception only applies to IRAs, which are a different kind of account under the law, even though they seem similar.  You owe regular income tax and the penalty for early withdrawal, if you are under age 59-1/2, or are separated from the company and are age 55 or older.

In the future, if you want to withdraw more retirement money for college expenses, you should roll over a portion of the 401(k) into an IRA and then withdraw the money from the IRA.  You still pay income tax but avoid the penalty.

For the AOTC problem, switch to Forms mode and find the personal information worksheet for your son, and the education expense worksheet.  There should be an entry there for number of years of schooling that you can edit.