topic First time home IRA withdrawal? in Retirement tax questions

First time home IRA withdrawal?

mandyschnak — Fri, 31 Jan 2020 05:06:22 GMT

Traditional IRA, withdrew <10k for first home. Withheld 10% taxes upfront. When I'm asked how much of the withdrawal I spent on the purchase, is this the gross distribution from the 1099-R, or the net (minus the withheld tax amount)?

Re: First time home IRA withdrawal?

dmertz — Fri, 31 Jan 2020 16:25:29 GMT

It's the amount of out-of pocket money (which includes any money from the IRA distribution) you spent to acquire the first home, up to a maximum of the gross amount of the distribution (1099-R box 1) or $10,000, whichever is less. In your case the box 1 amount is less than $10,000.

Re: First time home IRA withdrawal?

AnnetteB6 — Fri, 31 Jan 2020 16:15:03 GMT

If you added money from your own funds to make up for the 10% that was withheld for the taxes, then enter the total amount of the distribution shown in box 1.

If you actually used a lesser amount, then enter that lesser amount. Be aware that the difference between what you actually used and the amount distributed will incur the 10% early distribution penalty on your tax return.