Hello TTLC community:
If I have done an early withdrawal from the Roth IRA account with a gain (short-term capital gain + interest), how do I report this in my tax return?
My story is a bit complicated, I’ve made a mistake of recharacterizing an after-tax IRA contribution of $6,000 for 2021 in May 2022, after I filed my 2021 return on Apr 18, 2022. The initial non-deductible IRA contribution was done on Apr 14, 2022, right before the tax due date.
Not realizing my mistake until Sep 2023, I pulled out all the money, including gains, from Roth IRA; however, this happened before the extended 2022 tax due date (IRS automatically extended for CA residents due to natural disasters).
The total amount I pulled out was $6,237.76, including $214.98 of short-term capital gain and $22.78 of interest. However, I did not receive any 1099-B form for the short-term capital gain because the transactions happened under the Roth IRA account.
Here’s my questions:
I know because of the early distribution from the Roth IRA, I’ll have to pay income tax for the gain ($237.76).
Do I report this manually in Form 8949 for the transactions even though I did not receive any 1099-B from the custodian? But if I put it in 8949, will I end up being double taxed?
Or it’ll be calculated when I report the 1099-R for the Roth IRA account?
I do receive a 2023 1099-R (Box 1: $6,237.76, Box 2a: blank, Box 2b: Taxable amount not determined checked, Box 7: J) this year.
I think I need to manually update the Box 2a as $237.76 and then Box 3 as $214.98 (capital gain), is this correct?
Thank you very much for your help! Really appreciate it!!
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You have it exactly right - update 2a to $238 and box 3 to $215. That will tax the proper amount and charge you a penalty on the $238 withdrawal.
You have it exactly right - update 2a to $238 and box 3 to $215. That will tax the proper amount and charge you a penalty on the $238 withdrawal.
Thank you very much @RobertB4444, appreciate your reply and confirmation!
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