The whole penalty amount for the early distribution was calculated and is reflected on Schedule 2 of the 1040. The exception amount for First Home Puchases(Line I on Form 5329-Distributions Not Subject to Additional Tax Smart Worksheet = $10,000.00). The taxable amount of the early distribution on Line 1 of the Form 1099-R worksheet does not flow to Line 1 of Form 5329(Early distribution included in income). This is needed to calculate the amount subject to additional tax(Line 1 minus Line 2 = Line 3) . Then, the additional tax would be reflected on line 4 flowing to Schedule 2(which is less than the penalty amount for the whole distribution). Is this correct?