topic 1099-R Early Distribution Used for First Time Home Purchase in Retirement tax questions

1099-R Early Distribution Used for First Time Home Purchase

user17710063011 — Fri, 13 Feb 2026 18:18:36 GMT

I have two early distributions from IRAs used for first time home purchase ($10K each). First one is from my wife's ROTH IRA. Here 1099-R form has J in box 7 and IRA/SEP/SIMPLE box is unchecked. TurboTax did eventually ask me if there was an exception including first time home purchase. When I went to enter my 1099-R from my traditional IRA with 1 in box 7 and IRA/SEP/SIMPLE box checked, I got all screens except for the one asking if there was an exception including first time home purchase. My question is how can I get TurboTax to recognize this early distribution as an exception for first time home purchase? Why isn't it asking me this like it did for my wife's?

Re: 1099-R Early Distribution Used for First Time Home Purchase

DoninGA — Fri, 13 Feb 2026 18:25:23 GMT

You can complete a Form 5329 for the first time homebuyers exception to the early withdrawal penalty (first $10,000)

Click on Federal Taxes (Personal using Home & Business)

Click on Other Tax Situations

Under Additional Tax Payments

On Extra tax on early retirement withdrawals, click the start button

Re: 1099-R Early Distribution Used for First Time Home Purchase

user17710063011 — Fri, 13 Feb 2026 22:24:01 GMT

I called my broker and explained the situation. I had manually changed the distribution code (box 7) to 2 which is "Early distribution, exception applies (under age 59½)." Code 1 is "Early distribution, no known exception (in most cases, under age 59½)." I did this to see if TurboTax would treat it differently. It didn't ask the question if it was used for first time home purchase, but it did lower my taxes owed when I made the change. I assume it was the code change for box 7. My broker said they would revise the 1099-R for this change and send me the new 1099-R document. Will this be another way to submit correctly or do I still need to complete for 5329?

Re: 1099-R Early Distribution Used for First Time Home Purchase

DoninGA — Sat, 14 Feb 2026 11:47:01 GMT

@user17710063011 Yes, the code change in box 7 to a 2 will cause the 10% early distribution penalty to be removed.