@mrs-jackson0701
I assume you are under 59.5 years old (otherwise, there can't be a 10% penalty)
when funds are withdrawn from a Roth, the IRS assumes the money was withdrawn from these buckets in this order:
1) Contributions - there is no tax or 10% penalty when you distribute these dollars. All have to be distributed before moving to bucket 2.
2) Conversions - these are dollars that came from a Trad IRA. There is no 10% penalty on these dollars as long as the money was in the Roth IRA for 5 years. There is no tax on these dollars. All have to be distributed before moving to Bucket 3.
3) Earnings - these dollars are all subject to both tax and the 10% penalty.
which bucket(s) did this $20,000 come from and what code was in Box 7 of Form 1099-R. When did you first open this Roth IRA (or any other Roth IRA if it is older than this one) - please provide the year.
what tax year are you asking about and did your tax return include form 8606? did the IRS send you a letter or are you working on your 2022 tax return and you can see there is tax due on this distribution? Did you complete form 8606? please provide more background.
