The total on Schedule 2 is 10% times the amount subject to the penalty for both of them.  He withdrew $10941 from his IRA with code 1, and had $5000 in exceptions to the 10% penalty.  This left $5941 subject to the penalty, or $594 dollars.  She withdrew $34200 from her IRS with code 1, with no exceptions listed to the 10% penalty.  That is a total of $4,014, which is what is on schedule 2 of the 1040, and on the 1040.  For some reason, because she didn't have any penalties, is chose not to include her 5329-S in the return, so the IRS is saying that they owe $3,420 less.  I'm concerned that the IRS will catch up to their own mistake and bill them in the future, plus interest.