Level 3

1st time homebuyer age 76

Forum|Forum|4 years ago
April 8, 2022
4 replies
9 views

1st time homebuyer in 2021, age 76, took a $136,000 distribution from 401k for down payment on house. With this distribution, her income is over $200,000. She was told she can waive $10,000 of the distribution since she was a 1st time homebuyer. The 1099-R shows all of distribution is taxable and code 7 for normal distribution. She called her brokerage company and they said her "tax person needs to make the adjustment" on her taxes. She set aside $20,000 to pay her taxes due to the large distribution but she owes over $36,000. Is there a $10,000 tax break for a 1st time homebuyer, if so, where does this get entered in Lacerte?

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sjrcpa

Level 15

There's an exception to the 10% penalty for early withdrawal of up to $10,000 from IRAs for first time home purchases.

N/A for your client. See Form 5329 instructions.

The more I know the more I don’t know.

T

Terry53029

Intuit Community Champion

There are exceptions for the 10% penalty for withdrawing money from qualified retirement accounts if you are under 59 1/2, but the funds are subject to income tax. Seeing that your client is over 59 1/2 she is not subject to the 10% penalty, but if you have a 0 basis in the account it is always taxable income

IRonMaN

Level 15

We need to find the barber that keeps spreading that rumor about the "free money" for first time homebuyers. It must be a big barbershop since it seems that quite a few folks have posted here about that "deduction".

Slava Ukraini!