TurboTax Delux calculated my IRA distribution as income but it does not instruct me on how to go about paying the 10% penalty that I owe. It only shows me what I owe the IRS for taxable income.
The 10% early withdrawal penalty was entered on your tax return as a tax liability. It will already be included in the federal taxes owed, you do not pay it separately.
Thank you for your reply. I am helping a friend who's using Turbo Tax Deluxe and I don't know where to look on the return to prove to her that the 10% penalty has already been taken into consideration and calculated by the TT app (that is, if I am correctly understanding your reply). Do you have any suggestions on how I can go about this? Is there a line I can view on the actual return to prove this?
My friend is extremely fearful of mistakenly not paying the 10% penalty. We went through the TT deluxe taxing prep and included all info regarding the 1099R (exception code 1) information and everything else. At the end of it all TT informed us of a small amount owed to IRS. My friend keeps thinking, "ok, I owe x amount but where and how do I pay the 10% penalty on my early distribution?" I don't know where to look on the return to prove to her that the 10% penalty has already been taken into consideration (if I'm understanding your reply correctly) and calculated by the TT app. Do you have any suggestions on how I can go about this? Pardon my long story.
@heydaddyo7881 The penalty is on Form 5329 if the form is required. The penalty is entered on Schedule 2 Line 8. The total from Schedule 2 Line 21 flows to the federal tax return Form 1040 Line 23. The amount from Line 23 is included in the Total Tax on Line 24.
If the Total Tax from Line 24 is greater than the Total Payments on Line 33 then the amount of federal taxes owed will be shown on Line 37.
Thank you very much for the details. I'll use this info to show my friend that she does not need to send the IRS and additional monies other than the amount showed as owed on the TurboTax completed tax preparation forms. I very much appreciation the detailed explanation. Thanks again for the help!