We intended to take out the money from our 401K as a hardship withdrawal for the down-payment on our first home. Is there any way to report this to IRS?

[brmassoni]

Employer issued 1099R with box 7 as a 1.

[VolvoGirl]

Enter a 1099R under

Federal Taxes Tab or Personal (Home & Business)

Wages & Income at the top

Then scroll way down to Retirement Plans and Social Security,

Then IRA, 401(k), Pension Plans (1099R) - click Start or Revisit

There are 4 boxes.  Be sure to pick the right box for the kind of 1099R you got.

If you are filing a Joint return be sure to pick which person it is for.

Don't enter the bank or broker name and don't try to import it.  It is just as fast and easy to manually enter it.  At the bottom pick -  Change How I enter my Form

Then on the next screen pick I'll Type it in Myself

And there is a 10% Early Withdrawal Penalty if you are under 59 1/2.  You don't get an exception for buying a house.  The exception is only from an IRA.  

[brmassoni]

@VolvoGirl This is very unclear, with websites like this https://www.sofi.com/learn/content/401k-hardship-withdrawal/

But I am inclined to agree with you given this site: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distri...

[VolvoGirl]

Yes the rules for taking a hardship withdrawal is talking about the 401K plan letting you take it, not about the penalty.  The penalty is a separate thing.  Some hardship items can be an exception to the penalty.