Hello again,
I elected to have 10% withheld at the federal level by my Roth IRA custodian on the removal of excess form. I understand I will need to enter this withholding amount when I fill out the 1099-R on my 2022 tax return, but should I also fill in this same withholding amount on my mock 1099-R on my 2021 return now? I tried adding the withholding amount to the mock 1099-R as a test, and it did not seem to affect my 2021 tax due in any way.
My second related question is, must I pay the 10% early withdrawal penalty now with my 2021 return? It seems that TT is in fact adding the penalty to the amount I owe. I thought that by having the tax withheld by my custodian, I could avoid having to pay it myself with my 2021 return, but perhaps this is not true. I'm wondering now if I should have elected to do no withholding. If you can clarify, I would appreciate it.
Thank you.
