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1099R box 7 code 1 - qualify for down payment

parvitstax
Level 5

If I have a 1099R with Code 1 in Box 7 does this qualify for a down payment exclusion? 

I would think if the funds were used for a down payment there would be a different code. Is there a different way to enter this to qualify for the penalty exclusion?

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Skylane
Level 11
Level 11

Assuming you're talking about an exception on form 5329 for first home purchase, yes up to 10K. 

If at first you don’t succeed…..find a workaround

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10 Comments 10
Skylane
Level 11
Level 11

Assuming you're talking about an exception on form 5329 for first home purchase, yes up to 10K. 

If at first you don’t succeed…..find a workaround
IRonMaN
Level 15

The investment company can't vouch for how the money is spent.  If they qualify for an exception you would use form 5329

 


Slava Ukraini!
Just-Lisa-Now-
Level 15
Level 15

The financial institution doesn't care what you used it for.

If its an IRA you can exclude the first 10,000 from the penalty for early withdrawal if it was used for a first time home purchase, but its still taxable income. 

If its  a 401k, no penalty exclusion.

You use Form 5329 for the penalty exclusion.


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
IRonMaN
Level 15

If I knew everybody was going to get here at the same time I would have suggested car pooling.


Slava Ukraini!
BobKamman
Level 15

Everyone got here at the same time but no one asked if this was an IRA (not a 401k), or mentioned that it's code 09 on Line 2 of the Form 5329.  

parvitstax
Level 5

That is a good follow up.

Non SIMPLE vs SIMPLE Distribution 

 

*Code is automatically generated by ProSeries 

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Just-Lisa-Now-
Level 15
Level 15

I mentioned it needed to be an IRA, but didn't ask if it was.


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
IRonMaN
Level 15

Not that I really feel the need to justify things to Bob, but I did use the caveat of "if they qualify for an exception".  We should all be thankful that Bob is always here to point out things that nobody else would have ever thought of.


Slava Ukraini!
rbynaker
Level 13

Yeah, shame on Lisa for actually providing both possible answers without first asking the question.

qbteachmt
Level 15

Here's a nice reference table:

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-o...

 

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