How to input $1000 exemption for early withdrawal penalty?

allyra60
allyra60 Member Posts: 1 Newcomer
in Filing my taxes

Hello! I did an early withdrawal out of my retirement plan due to unforeseen circumstances. I learned I can claim a $1000 exemption for it due to an emergency. I can't figure out how to mark that when filing my taxes in FreeTax. Where should I input it?

Also, we pulled from both mine and my husband's retirement. I am assuming I can only do the exemption once since we are married filed jointly. Is that correct?

Any help is appreciated!

Answers

  • KeriC
    KeriC FreeTaxUSA Agent Posts: 218

    @allyra60
    After you enter the 1099-R and are on the "Your Retirement Income" page, press Continue. After a couple of pages, you will come to the "Do any of these 10% penalty exceptions apply?" page. Check the exception that applies and enter the amount.

     Per IRS Notice 2024-55, "Emergency personal expense distributions are subject to three limitations.

    "First, section 72(t)(2)(I)(ii) provides that not more than one distribution per calendar year is permitted to be treated as an emergency personal expense distribution by any individual.

    "Second, section 72(t)(2)(I)(iii) permits an individual to treat a distribution as an emergency personal expense distribution in any calendar year in an amount up to a maximum of $1,000.

    "Third, section 72(t)(2)(I)(vii) provides rules that limit taking subsequent emergency personal expense distributions."

    Based on this, it looks like the $1,000 exception is applied per individual and not per tax return or couple.

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