The 10% tax penalty for early withdrawal from your 401(k) is calculated by TurboTax and included in the amount of tax due or refund.
You just need to enter your form 1099-R correctly and answer the questionnaire about the form 1099-R in TurboTax.
Does turbo tax know when you are not suppose to be penalized?
Do you receive a notice of some sort indicating when the penalty has been paid? Having a hard time understanding when and how the payment of the penalty is made since it's not automatic.
The payment of the penalty is included in the amount of tax due or refund. There is no separate notice.
I know its a year later but all Turbo did this year was to advise the amount of the penalty. It did not include it in the amount of the IRS tax I owed.
Unless you indicated that you qualified for an exception for the early withdrawal penalty, TurboTax would create a Form 5329 to include the penalty on your tax return automatically. @RPS
Nobody at Intuit will talk to me, so I’ll take my 2022 tax forms to a CPA to correct an issue TurboTax caused and then sue Intuit to get restitution for any upcoming IRS penalties.
I took an early 401k distribution and entered the 1099-R form and it eventually gave me the screen message that my “extra tax bill would be $xxxxx”. Ok, that is fine and knew that was coming. However, after doing all the reviews and it saying everything was good, I found that TurboTax did not file the Form 5329 so it did not actually send in the early withdrawal penalty with my payment.
Now I have to deal with this BS. Never again Intuit! Never again!
You don't need form 5329 if you are only reporting the 10% Early Withdrawal Penalty. Didn't the additional tax show up on Schedule 2 line 8 which goes to 1040 line 23? See the line right above Part 1on 5329