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Should I count the money I took out of my 401 k , to purchase a home W2 income on my taxes even though federal was already taken out?

I'm over the age of 55 so there is no penalty
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3 Replies
ColeenD3
Expert Alumni

Should I count the money I took out of my 401 k , to purchase a home W2 income on my taxes even though federal was already taken out?

The money you took out of your 401k would be listed on Form 1099-R, not a W-2. Yes, it is income.

 

Here's how to enter your 1099-R:

  1. Open (continue) your return if you don't already have it open
  2. Search for 1099-R and select the Jump to link in the search results
  3. Answer Yes on the Did you get a 1099-R? screen
    • If you land on the Review your 1099-R info screen instead, select Add Another 1099-R
  4. Answer any questions until you get to the import screen. You'll be prompted to enter your financial institution account info and TurboTax will directly import your forms
    • If you prefer to type it in yourself, select Change how I enter my form and continue through

 

 

Should I count the money I took out of my 401 k , to purchase a home W2 income on my taxes even though federal was already taken out?

You are mistaken that there is not an early withdrawal penalty before age 59 1/2 for taking money out of a 401k for the purchase of a house.  There is a 10% early withdrawal penalty.   That rule about no penalty before age 59 1/2 for money taken out of a retirement account to buy a house is for traditional IRA's---not for a 401k.   Make sure you enter your 1099R.

 

To enter your retirement income, Go to  Federal> Wages and Income>Retirement Plans and Social Security>IRA  401 k) Pension Plan Withdrawals to enter your 1099R.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

Should I count the money I took out of my 401 k , to purchase a home W2 income on my taxes even though federal was already taken out?

I'm over the age of 55 

The age 55 penalty exception for a 401(k) applies only if you left that job at age 55 or more.

 

And even though taxes were already withheld, they may not have been enough to pay the actual taxes due.

 

 

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