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jhiest
New Member

Has anyone else had an issue with turbotax ignoring the Federal Tax withheld box on a 1099-R form and not accounting for the tax already paid?

For example, I early-withdrew 70k from my ira and paid 7k at the time of withdrawal.  I put 7k in the federal taxes withheld box on the 1099-R but turbotax still thinks i owe the 7k.
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3 Replies

Has anyone else had an issue with turbotax ignoring the Federal Tax withheld box on a 1099-R form and not accounting for the tax already paid?

You didn’t actually pay the tax or the 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 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/5b. The withholding will show up on 1040 line 25b.


It has to break out and show the 10% penalty separately on your return (schedule 2 line 8 which goes to 1040 line 23). Then you get credit for all the withholding taken out on 1040 line 25b.

JohnB5677
Expert Alumni

Has anyone else had an issue with turbotax ignoring the Federal Tax withheld box on a 1099-R form and not accounting for the tax already paid?

If you withdrew the money early "before 59 1/2" there is a 10% penalty.  

If that is the case, you did pay the penalty, but you did not pay the tax on the withdrawal.

Can that be what you are seeing?

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Has anyone else had an issue with turbotax ignoring the Federal Tax withheld box on a 1099-R form and not accounting for the tax already paid?

The $7,000 you still see on your tax return is for the 10% Early Withdrawal Penalty.  See my post above.  The 7,000 tax withholding was not enough to cover the increase in tax on all your income and the 10% penalty.  

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