Taxpayer is a 1st time home buyer 2009 and withdrew from 401k to cover down deposit & closing cost.
1099-R: taxpayer gross distribution was $18k (1).
thetaxable amount is 15k (2a)
federal income tax withheld is $1500 (4)
Employee Contrib/Designated Roth contrib or ins. premium (5) is $2500.
Distribution code 1.
From my understanding taxpayer should file the Form 5329 b/c 10,000 of Early Distributions is not subject to 10% tax. My question is: when taxpayer file does taxpayer input difference of between 15k and 10k in 2a taxable amount at 5k and input 10k on the 5329form, therefore only paying 10% penalty on the 5k.
THanks in advance for feedback. I am so confused. everytime i input everything exact amount from Form 1099-R in taxslayer, i end up owing taxes and appears i am being penalized for entire 15k instead of the 5k. When i input difference it appears right that 10% tax is on the 5000 instead of 15000.