We used money from an ira early withdrawal to pay for my wife's education expense (she's back in college working on another degree), but TurboTax doesn't appear to be applying the education cost exemption against the 10% early withdrawal penalty. I don't see any education cost deducted on line 2 of form 5329, only a calculation of a small lifetime learning credit on Form 8863 that is unrelated to the 10% early withdrawal penalty.