Well, TurboTax community, I think I've really stepped in it this time. I put $1,700 into a Roth IRA in the first few months of 2021 before we both got raises and I realized our family's (MFJ) income would be too high to make any Roth contributions at all. In 2022, after getting to the IRA section of my TurboTax return and doing some cursory Googling, I did a removal of 2021 contributions and gains with Betterment, my Roth provider, which automatically calculated the gains (about $200, for about $1900 total). And I remembered that there was a 10% excise tax on early withdrawals, so I entered 10% in the tax withholding field.
I went back to the IRA section of TurboTax (the web app, in case it matters) and followed the prompts to say that I'd withdrawn my contributions. That seemed to settle things for TurboTax: there was no prompt about the income on those contributions. "But wait," I thought. "Don't I have to pay taxes on the gains? And an excise tax on early withdrawals?" And that's when I learned that I wouldn't be getting a 1099-R until Jan. 2023, and found posts from @macuser_22 here and u/myroller on Reddit saying to create a "mock 1099-R" if I wanted to avoid that.
I'd love to do that. But I realize now that because I had Betterment withhold taxes -- and, as it turns out, the 10% withholding was on the ENTIRE WITHDRAWAL, not just the gains -- I don't think I can go the "mock" route, right? I asked Betterment if they'd cancel the withholding and give me the money, but I'm doubtful they will. It sounds like I just have to file an incorrect tax return and a 1040-X next year after I get a 1099-R? Do I have this right?
