Did TurboTax incorrectly compute my federally taxable IRA/Keogh/Roth IRA plan distribution in my Massachusetts tax return?

[Leary_BIMA]

Hi,

in 2024, I opened a Roth IRA account for the first time and contributed $7000.

Just before the end of year 2024 and estimating my MAGI, I withdrew $3500 of excess contribution + any earnings from this $3500. The 1099-R I received in spring 2025 for this withdrawal shows Gross distribution (box 1) $9951.95, Taxable amount (Box 2) $6451.95, Distribution code(s) (Box 7): J8, State distribution (Box 16) $9951.95. I entered this 1099-R information into my federal portion TurboTax.

While preparing my tax return in Spring 2025 (before April 2025 due date) and after TurboTax computed my MAGI, I needed and withdrew the remaining of my contribution ($3500) + any earning from this remaining contribution.  After reading Q&A in TurboTax Community and to avoid having to amend my 2024 tax return later on, I created a dummy 1099-R with code JP in my 2024 TurboTax with Gross distribution (box 1) $7146.21, Taxable amount (Box 2) $3646.21, Distribution code(s) (Box 7): JP, State distribution (Box 16) $7146.21.

In the follow up questions in TurboTax "Corrective distributions made before the due date of the return", I entered the earnings, which is $10098.16. In Deduction section for Roth IRA Contribution, I entered $7000 into "Enter Your Roth IRA Contributions", and entered $7000 into "Contribution Withdrawn Before the Due Date". 

I believe by doing the above, I entered my information the Federal portion correctly. Both 1099-R combined, my total Gross distribution is $17098.16, Taxable amount is $10098.16, State distribution is $17098.16. The same amounts are shown in "Retirement Income Result" distribution total and taxable, just before going to Other Tax Situations and Federal Review.

However, in working on my Massachusetts, TurboTax shows "Your total federally taxable IRA/Keogh Plan distributions received during 2024 are $13598". My questions about this:

1. I did not have any withdrawal from traditional IRA account and I do not have Keogh account. Why is "Your total federally taxable IRA/Keogh Plan distributions received during 2024" not equal to $0?

2. In case if by "IRA/Keogh Plan distributions", TurboTax meant to include Roth IRA distribution in the calculation, why is my total taxable distribution amount $13598? It should be $10098 as shown in "Retirement Income Result" in federal review. 

[Leary_BIMA]

Additional information of what could be the culprit:

In trying to troubleshoot this, I tried process of elimination.

First, in the federal section, I deleted the second 1099-R (the dummy 1099-R with code JP) leaving only the first 1099-R with code J8. I adjusted my earnings in "Corrective distributions made before the due date of the return" question and my answer to "Contribution Withdrawn Before Due Date of Your Return" accordingly. The result:

• Federal section review correctly reflects the contribution withdrawn.
• In the State (Massachusetts) section, the total federally taxable IRA/Keogh Plan correctly showing only the taxable amount (box 2a) from the 1099-R with code J8.

Next, trying the opposite scenario. I deleted the first 1099-R (the 1099-R with code J8) leaving only the second 1099-R with code JP (the dummy 1099-R). I adjusted my earnings in "Corrective distributions made before the due date of the return" question and my answer to "Contribution Withdrawn Before Due Date of Your Return" accordingly. The result:

• Federal section review correctly reflects the contribution withdrawn.
• In the State (Massachusetts) section, the total federally taxable IRA/Keogh Plan incorrectly showing the gross distribution (box 1) as the taxable amount, instead of taxable amount (box 2a) from the dummy 1099-R with code JP. 

This means the culprit is with how TurboTax computes the taxable amount from the dummy 1099-R with code JP in the state (Massachusetts) section. It somehow ignored the excess contribution withdrawn, and incorrectly computes the gross distribution (box1) as the taxable amount. However, TurboTax somehow correctly computes the federal section. Why?

In creating the dummy 1099-R with code JP, I followed the instructions from these threads:

• https://ttlc.intuit.com/community/retirement/discussion/what-if-i-don-t-receive-1099-r-in-time-to-fi...
• https://ttlc.intuit.com/community/retirement/discussion/roth-ira-excess-contribution/00/3262070