When you enter the code-J Form 1099-R into TurboTax, TurboTax will ask you the amount of the contributions made for prior years. After entering the Form 1099-R and your contribution basis, TurboTax will prepare Form 8606 Part III to calculate the taxable amount (which should be zero if your distributions were less that your contribution basis). Only the taxable amount, if any, is subject to penalty.
