@meAtTBT wrote:
Thank you, that is very helpful.
I also see for myself what happens in the software -- if I reduce my claimed Contributions and I do owe tax, then TurboTax Desktop asks me to fill in boxes related to how I used the money and I can put in my Higher Education amount.
Withdrawal of Roth contributions is never taxable.
Withdrawal of Roth conversions is sometimes subject to the 10% early withdrawal penalty but not income tax.
Withdrawal of Roth earnings is subject to income tax if you are under age 59-1/2, and is also subject to a 10% penalty for early withdrawal.
There are certain exceptions to the 10% penalty, such as for higher education expenses, a "first time" home buyer, paying medical insurance premiums during a time of unemployment, and a few other things. You may or may not qualify for the exceptions depending on your situation.
You will have to tell Turbotax about your Roth contributions and conversions so the program can determine the amounts subject to tax and penalties, if any. The IRS has this information independently and should be contacting you if you report incorrect amounts and pay too little tax or penalties.
Whatever tax you end up owing is calculated on your tax return after taking all factors into account. If you had some withholding, you get credit for that, but you may owe more or get a refund if the withholding doesn't match the calculated tax.
