Discussion:IRA DISTRIBUTION FOR FIRST TIME HOME PURCHASE
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Discussion Forum Index --> Advanced Tax Questions --> IRA DISTRIBUTION FOR FIRST TIME HOME PURCHASE
Discussion Forum Index --> Tax Questions --> IRA DISTRIBUTION FOR FIRST TIME HOME PURCHASE
Mrbarrytax (talk|edits) said: | 6 February 2008 |
| My client withdrew $40,000 from met life annuity which held her ira account. box 7 has a "1" in it and the box indicating ira/simple ira is checked. she used the money to buy her first home.
Following the directions on the program it tells you to look for a "j" code for first time homebuyer. This 1099-r does not have this code letter. Is this client eligible for $10,000 first time penalty exclusion and how does IRS track this information? | |
| 6 February 2008 | |
| Mrbarry,
Ive had a few of these - the issuers of the 1099R's don't always know that the disbursement is for first time buyer. I would take the exclusion - might have to override your software - and attach a statement that the money was used to buy home. You may get a notice down the road but then all you have to do is copy the attachment you provided annotating the reg and IRS should accept it. I have no idea whether IRS is tracking the code numbers. | |
Michaelstar (talk|edits) said: | 6 February 2008 |
| The client would have needed to inform the custodian of the IRA to have had this coded. Yes, the t/p is still eligible for the $10k exclusion if that is what the funds were used for. I would walk the t/p through the paperwork they need to be able to prove this. Keep a copy in your files.
Claim the exclusion and attached an information stmt to the t/r. If and when the letter arrives - just provide the documentation to the IRS. You might even call the IRA custodian to confirm if they might amend the 1099-R for this. | |
| 6 February 2008 | |
| Use Form 5329 to claim the penalty exclusion. On Line 2, enter the code for first time home buyer and the amount ($10,000 in this case) to be excluded from penalty. | |
