I am going to be purchasing a home in the near future. I plan to withdraw $10,000 from my traditional IRA to cover some of the cost. About how much money should I have witheld for tax purposes and what forms will I need to provide the IRS as proof that the money was used for a first time home purchase?

ANSWER

Expert Mark Anderson's Answer:

If you are a first-time home buyer, then you can avoid the 10% penalty.   You would calculate the tax based upon what tax bracket you are in.  You would then just estimate the tax by multiplying your tax rate times the distribution.  You should keep proof of your purchase of the home such as your buy-sell agreement, closing statement, and title policy.  I hope this answers your question.  Thank you.

Mark Anderson, JD

Montana

21 yrs experience

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