If the distribution is being taxed as income then you may be missing the basis of the Roth IRA.
You will need to enter information about the basis of the Roth IRA in order to reduce or eliminate the amount being included as income.
The basis of an IRA is the amount that was originally contributed. This does not include earnings that have accumulated in the account over time. You can take a distribution of your contributions to a Roth IRA without any penalty or income tax. Therefore, TurboTax needs to know how much of your distribution was contributions to the account.
After you enter your Form 1099-R, there should be some follow-up questions to go through. One of those questions will ask about Prior Year Roth IRA Contributions. This is where you should enter the amount that had been contributed to the account.
If you do not see those follow-up questions, keep reading below for another method to enter your Roth IRA basis:
Go to Deductions and Credits > Retirement and Investments > Traditional and Roth IRA Contributions and click Start or Update.
This will bring you to a screen with checkboxes to indicate what types of accounts you had in 2023. Be sure that Roth IRA is checked. Click Continue.
If Traditional IRA is checked or if you have a spouse that had either type of account, the next questions will not pertain to your Roth IRA. Continue through this section until you are asked whether you made any contributions to your Roth IRA for 2023. This is the beginning of the section where you will enter details about your Roth IRA, including the basis.
Continue answering the questions according to your situation. On the screen where you see Let Us Track Your Roth IRA Basis, click Yes.
Then, on the screen titled Enter Prior Year Roth IRA Contributions, this is asking for your total contributions for years prior to 2023 (basis). If your basis exceeds your distribution, then the distribution will not be taxable. If the distribution exceeds your basis, then the excess will be taxable.
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