topic I am entering a 1099-R for an early withdrawal before age 59 1/2 I already had 20% federal income tax withheld, but turbo tax is adding more than 20% penalty in Retirement tax questions

I am entering a 1099-R for an early withdrawal before age 59 1/2 I already had 20% federal income tax withheld, but turbo tax is adding more than 20% penalty

michelle — Wed, 18 Feb 2026 21:43:12 GMT

I should be getting $2220.99 as a penalty, but the program is making the penalty $4725 instead

Re: I am entering a 1099-R for an early withdrawal before age 59 1/2 I already had 20% federal income tax withheld, but turbo tax is adding more than 20% penalty

xmasbaby0 — Wed, 18 Feb 2026 21:53:07 GMT

You had tax withheld from the distributions from the retirement account, just like when an employer withheld tax from your paychecks. When you enter it all into the software, the calculations are done to reconcile the total amount of income you received and the amount of tax that was withheld. You might owe more or you might get a refund.

Re: I am entering a 1099-R for an early withdrawal before age 59 1/2 I already had 20% federal in...

MinhT1 — Wed, 18 Feb 2026 21:58:06 GMT

The early withdrawal penalty is 10% of the amount withdrawn, not 20%. In addition to the penalty, you have to pay income taxes on the amount, at the rate corresponding to your total taxable income.

Tax withheld is just an estimated advance payment of your taxes. The final tax amount can only be determined when you fill out your tax return. The taxes withheld serve as a credit against your tax liability. If too much tax was withheld, you'll receive a refund; otherwise, there'll be a tax due.