Returning Member

Roth Distribution

I took two distributions from my Roth account in 2019.  One of them I elected to pay the early withdrawl penalty of 10% as it was a non-qualified distribution.  The second distribution I elected not to pay the early withdrawl penalty because I used the money for a first time home purchase ($10,000).  

 

Line 2A on my 1099R shows no amount ($0)

Line 2b on my 1099R  shows "taxable amount not determined"

 

I've selected Code 2-Early Distribution (except Roth IRA)

 

Have I set all of this up correctly in Turbo Tax?

Level 15

Investors & landlords

You enter the 1099Rs exactly as shown.  What codes are in box 7?

 

You did not pay the 10% Early Withdrawal Penalty When you took the distribution.  

 

You didn't actually pay the tax or 10% penalty (you pay a 10% early withdrawal penalty if you are under 59 ½).  You had taxes withheld like from your paycheck. You still have to enter the whole gross original amount (before taxes were withheld) with your other income to figure out the total tax (and it may put you into a higher tax bracket) and then the withholding is subtracted from the total tax to figure your refund or tax due. The gross amount shows up,on 1040 line 4a/4c and the taxable amount on 4b/4d.  The withholding will show up on 1040 line 17.

 

It has to break out and show the 10% penalty separately on your return, (Schedule 2 line 6 which goes to 1040 line 15)

Then you get credit for all the withholding taken out on 1040 line 17.

Returning Member

Investors & landlords

What I know about a Roth is that you don't pay tax on distributions, just the early withdrawl penalty.  So what did I pay if 10% was withheld and shows as tax?  I shouldn't be paying tax and a penalty, correct?

 

How exactly do you show the below in Turbo Tax?

"It has to break out and show the 10% penalty separately on your return"

 

The whole distribution is being shown.

 

The 1099 is not coded correctly as this was an exception...I used the $ to purchase a home.

 

Appreciate your help,

Scott

Expert Alumni

Investors & landlords

What do you have in your box 7 of your 1099-R? You said you used code 2 (which is early distribution exception applies). To get the distribution to not show as taxable you should use code Q (Qualified distribution from an IRA)

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Level 15

Investors & landlords

If you're going to fudge codes to get the results you want, you should attach an explanation statement to your return explaining what you did.

Expert Alumni

Investors & landlords

@fanfare exactly. I was asking what the 1099-R actually showed. If what @sfelcher described was the case, that is the distribution was supposed to be a qualified distribution, then I would expect the code in box 7 to be code Q. Just like you said @fanfare, an explanation will need to accompany the tax return.

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