1099-R doesn't differentiate contributions and earnings

[vijay-saikrishna]

Hi,

I made excess Roth IRA contributions few years ago and I removed both contributions and earnings in 2024. I removed $2400 as contributions, $700 as earnings with a total of $3,100 and around $76 is federal tax held. However, the 1099-R, I received from my financial institution says the total gross distribution as $3100 without splitting contribution and earnings. When I entered this in TurboTax, I am being taxed because the distribution isn't qualified (home-buying or after 59.5 years of age).

I believe I have to pay regular tax rate (based on my income) on the $700 earnings only. I don't understand how this was reported and interpreted by TurboTax software.

[dmertz · Accepted solution]

For a nonqualified Roth IRA distribution, it's your responsibility to differentiate between nontaxable an taxable amounts by preparing Form 8606 Part III.  TurboTax prepares Part III based on the gross amount of the distribution reported in box 1 of the code-J Form 1099-R and your entries of your Roth IRA contribution and conversion basis.  Be sure to click the Continue button on the page that lists the Forms 1099-R that you have entered and, when asked, enter your basis information.