I thought I had overcontributed to my Roth IRA so I withdrew some amount of contribution + earnings on those contributions.
From the research I've done, withdrawal of contributions from a Roth IRA should be tax free and penalty free (though the earnings aren't). This should be the case regardless of age or the holding period.
I received my 1099-R from my brokerage (Betterment) who listed the entire amount withdrawn ($1,269.53)
as taxable amount rather than just the earnings. So box 1 = box 2a, and box 2b taxable amount not determined is checked. With distribution code J8.
I asked my brokerage why it lists the full amount and not just the earnings and they said it's because they just list the total amount that could be taxable, since they don't know the full extent of my situation, and that's why 2b is also checked.
From doing research it seems that what's supposed to happen is that as I fill out my tax forms through Turbo Tax, after I fill out my basis from before 2019, it should determine how much of my withdrawal is actually taxable and therefore not charge me on the contributions.
Entering my 1099-R causes my refund to drastically reduce, yet entering my basis has not fixed it at all.
A couple questions
- When I'm asked to enter Roth IRA contributions for 2019, it says not to include the amount entered on Form 1099-R. Does that mean I enter $6000 - $1,269.53? However the amount includes earnings, not just contribution.
- How do I fix it so it recognizes that I withdrew contributions that should not be taxed/penalized?
