Is there a way to remove the additional 10% the system says you owe for early distribution?

[courtneysimmons2]

I overpaid for taxes and the  income from the withdrawal did not put me i a higher tax bracket so I should break even with what was withheld as there was a sufficient amount to cover the 10% penalty as well.

[DoninGA · Accepted solution]

A taxable withdrawal from a tax deferred retirement account is entered on your tax return as ordinary income and taxed at your current tax rate.

The federal taxes withheld for the withdrawal from a tax deferred retirement account are entered on Form 1040 Line 64 as a tax payment (just like from a W-2).  The 10% early withdrawal penalty is assessed and entered as a tax liability on Form 1040 Line 59.  If your total tax payments are greater than your total tax liabilities you will receive a tax refund for the overpayment.  If your total tax payments are less than your total tax liabilities then you will have taxes owed.