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Level 2

Solved

Roth IRA non-taxable distribution is being taxed!

Forum|Forum|5 years ago
February 10, 2021
2 replies
16 views

My wife and I are not 59 1/2.

In 2020, my wife and I took out $2000 in principal originally deposited into our Roth IRAs, money that was originally deposited well before 5 years (not that it should matter) and was not interest.

After importing the two 1099-R reports in from the financial company, very few boxes were checked but those that were included "2b - Taxable amount not determined", and a code of J in box 7.

TurboTax is now taxing this distribution, which it shouldn't as it falls under the guidelines of what we can take from our Roth IRA, without being taxed.

I don't see where I can add any additional information to make this work the way it's supposed to. Help!

TurboTax Premier Online

Best answer by DanaB27

When I hit "Continue", the next page shows this:

Is the IRA/SEP/SIMPLE box on this 1099-R checked?

Yes

x No, the box is blank

Then Continue:

Tell us if any of these uncommon situations apply

I took out this money because of a qualified disaster (includes COVID-19)

I inherited this IRA

I need to file a substitute 1099-R

The corrected box is checked on this 1099-R

x None of these apply

Then continue:

Did xxxx rollover all of this $2,000.00 (Box 1) to another retirement account?

Let us know if you rolled over all or a portion of this distribution by depositing it in another retirement account (or returning it the same one) within the rollover time limits.

Yes, xxxx rolled over $2,000.00 to another Roth IRA (or returned it to the same account).

No, xxxxx rolled over less than $2,000.00.

x I did something else

Hit Continue:

Did xxxx use the money you withdrew to buy your first home?

xxxxx taxable income can be reduced by up to $10,000 for a first-time home purchase.

Yes, all or part of this money was used to buy a home

x No, xxxx didn't

And that's it.

After all the questions you mentioned you will get back to the "Review your 1099-R info" screen and you will need to click "Continue" to get to the additional questions. Continue through all the questions.

Also, if the "jump" function doesn't work for you then you can use these steps to get back to the 1099-R section:

Login to your TurboTax Account
Click "Federal" from the left side of your screen
Scroll down and click "Edit" next to "IRA, 401(k), Pension Plan Withdrawals (1099-R)"

DanaB27

Level 15

Yes, you can withdraw contributions you made to your Roth IRA anytime, tax- and penalty-free.

Please click continue after you entered all your 1099-R and are on the "Review your 1099-R info" screen. TurboTax will ask more questions about the distribution.

Login to your TurboTax Account
Click on the Search box on the top and type “1099-R”
Click on “Jump to 1099-R” and enter all your 1099-Rs
Click "Continue" on the "Review your 1099-R info" screen
Answer all the questions and make sure you enter the net contributions prior to 2020 on the "Enter Prior Year Roth IRA Contributions" screen
Answer the remaining question.

You can verify your entry by looking at Form 1040 line 4:

Click on "Tax Tools" in the left menu
Click "Tools"
Click "View Tax Summary" in the Tool Center window
Click on "Preview my 1040" on the left

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cb3500blueAuthor

Level 2

Per your suggestion, I made to #3, but there was no "Jump to" link.

dmertz

Level 15

To reach TurboTax's questions regarding your Roth IRA contribution and conversion basis, click the Continue button on the Your 1099-R entries page.

cb3500blueAuthor

Level 2

I understand the basics of my 1099-R, what I'm having trouble with is being able to manipulate the information that has been imported. I've seen the suggestions posted here and online but they are not working. I have basic Premier addition, I don't know if that is a factor.

dmertz

Level 15

To reach TurboTax's questions regarding your Roth IRA contribution and conversion basis, click the Continue button on the Your 1099-R entries page. There you'll enter your basis information necessary for TurboTax to be able to prepare Part III of Form 8606 to calculate the taxable amount of the distributions (which will be $0 if no more than the basis in Roth IRA contributions was distributed. TurboTax will include the gross income on Form 1040 line 4a but will exclude from line 4b the nontaxable amount.