There is no credit for buying a house, but there is an exception to additional 10% penalty tax on early IRA withdrawals when they are used towards the purchase of your first home. Please click here for Retirement Topics-Exceptions to Tax on early Distributions.
You will receive a Form 1099-R for your withdrawal. Please be sure to enter all the information into Turbo Tax exactly as it appears on the form. You will then be asked additional questions about the distribution and will be able to indicate your first home purchase exception.
However, you may have to have to pay the "regular" income tax on the distribution itself, excluding your nondeductible contributions. So again - be sure to answer follow up questions about your IRA distribution. TurboTax will ask if you have any nondeductible contributions in your IRA (called basis). Please be sure to enter your basis amount, only the difference between your distribution and your basis will be taxed.
To enter form 1099-R, please follow the steps below:
- Federal Taxes
- Select Wages and Income
- Scroll down to Retirement Plans and Social Security
- Select IRA, 401(k), Pension Plans (1099-R)
Note: There used to be a credit called First Time Homebuyer Credit - but it was only available in 2008 and 2009.
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