I am currently receiving Unemployment benefits. I am planning on withdrawing $5,000 from my IRA. I understand I have to pay taxes on it, but I am also using $3,600 to pay for my health insurance premium for the year. I know I am exempt from paying the 10% early withdrawal penalty because I am unemployed and I am using most of it for my health insurance premium ($300 per month), and I understand that I will still be paying the 10% penalty for $1,400 (since this is the difference 5000-3600), my question is, how can I go about this specific detail when it's time to file for my taxes for year 2017? I don't mind paying the 10% penalty fee but only for $1,400 because the rest of the money I am withdrawing is going towards paying my health insurance. I want to make sure I do this correctly so I won't be charged 10% for the entire $5,000. Can you help me please?
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The amount that was withdrawn (form 5329 seems correct) is still showing on line 4b of the 1040 and adding into the AGI.
@Mako Do you have a question? The 5329 is to avoid the 10% Early Withdrawal Penalty. The withdrawal might still be taxable.
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