IRA accounts provide a way for people to save for retirement. These accounts have certain tax advantaged properties that make them attractive ways to invest. However, to prevent people from taking advantage of these accounts for non-retirement purposes, the IRS imposes a penalty on non-qualified withdrawals, such as early withdrawals.
Add up all your taxable contributions made to the IRA.
Subtract the amount of the total taxable contributions made to the IRA from the withdrawn value of the IRA. This number is the amount subject to tax.
Multiply the amount subject to additional tax by 10 percent or 0.1. This amount is the additional tax penalty due on the withdrawal.
Report this amount via Form 5329 with your federal income tax return.