So I uploaded my Inherited Roth IRA 1099-R form and the distribution code on line 7 is T. It also shows on line 2b that the taxable amount is not determined. Turbotax didn't show I own any tax on the distribution I took for the year (until it asked me if it was an inherited IRA, and then it taxed me on the whole distribution when I checked that box). I'm 48 years old, not sure if that has something to do with it. But everything I'm reading online says my age doesn't matter if it was an inherited Roth. It was my mother who passed away in late 2021, and this is for tax year 2022. My mother had this Roth IRA account open in her name for well over 5 years.. she probably had it open for 20 years or more. Right after she passed, I transferred the account to another financial institution, but I left everything else the same (it's showing I inherited the account, it's still a Roth IRA). I've been reading online that if I inherited a Roth IRA account, I shouldn't have to pay taxes on any of the distributions, ever. I don't know what I'm doing wrong here. Why is Turbotax taxing me the 10% penalty ONLY when I check the box that this is an inherited IRA. Is it not recognizing this is a Roth?
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After you answer Yes to the question that asks if the distribution came from an inherited account, TurboTax normally asks you to specify the taxable amount since it can depend on when the decedent first opened a Roth IRA and perhaps the amount of Roth IRA contributions and conversions made by the decedent. TurboTax then places this amount into box 2a to record the entry. If TurboTax does not ask how much is taxable, enter the taxable amount directly into box 2a of TurboTax's 1099-R form.
I highly recommend you delete the 1099-R and re enter it again carefully and complete all the follow up screens in that section since the code T is an exception to the penalty automatically.
After you answer Yes to the question that asks if the distribution came from an inherited account, TurboTax normally asks you to specify the taxable amount since it can depend on when the decedent first opened a Roth IRA and perhaps the amount of Roth IRA contributions and conversions made by the decedent. TurboTax then places this amount into box 2a to record the entry. If TurboTax does not ask how much is taxable, enter the taxable amount directly into box 2a of TurboTax's 1099-R form.
Thanks! I don't think those follow up questions showed up the first time I entered the information, or I somehow by-passed them. I just went back and the questions were there. Everything looks accurate now, thank you.
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