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Unfortunately, there is no deduction for a down payment on a home. So the only deductions that might be available if you can itemize are deductions for mortgage interest, real estate taxes, local taxes, charitable deductions, and other miscellaneous deduction. Itemizing will only benefit you if the total deductions exceed the standard deduction for a married couple of $11,600.
There are some exceptions to the 10% penalty but these are limited ( for example, after separation from service after age 55, for certain medical expenses, for permanent disability, etc).
So the $23,000. would be considered "regular" income? The penalty would be on the total amount or the
Yes, the $23,000 would be taxed as ordinary income and the 10% penalty would be on the full amount. So the penalty would be $2,300.