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dcbex
New Member

I completely cashed out a ROTH IRA in 2017. The IRA was opened in 1999 with $2000. The amount cashed out was $2056. Why am I being taxed on the whole amount?

 
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1 Best answer

Accepted Solutions
AnnetteB
Intuit Alumni

I completely cashed out a ROTH IRA in 2017. The IRA was opened in 1999 with $2000. The amount cashed out was $2056. Why am I being taxed on the whole amount?

In order to be sure that you are taxed only on the earnings in the Roth IRA and not the original contribution, you must enter the basis for the account.  Use the information below to do so:

  • On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
  • This opens a box where you can type in “Roth IRA” (be sure to enter exactly as shown here) and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
  • The search results will give you an option to “Jump to Roth IRA
  • Click on the blue “Jump to Roth IRA” link

This will bring you to a screen with check boxes to indicate what types of account you had in 2017.  Be sure that Roth IRA is checked.  Click Continue

If Traditional IRA is checked or if you have a spouse that had either type of account, the next questions will not pertain to your Roth IRA.  Continue through this section until you are asked whether you made any contributions to your Roth IRA for 2017.  This is the beginning of the section where you will enter details about your Roth IRA, including the basis.

Continue answering the questions according to your situation.  On the screen where you see Let Us Track Your Roth IRA Basis, click Yes

Then, on the screen titled Enter Prior Year Roth IRA Contributions, this is asking for your total contributions for years prior to 2017 (basis).  If your basis exceeds your distribution, then the distribution will not be taxable.  If the distribution exceeds your basis, then the excess will be taxable.

Finish the rest of the follow-up questions about your Roth IRA. 





View solution in original post

2 Replies
dmertz
Level 15

I completely cashed out a ROTH IRA in 2017. The IRA was opened in 1999 with $2000. The amount cashed out was $2056. Why am I being taxed on the whole amount?

Is this the only Roth IRA account you ever had?
AnnetteB
Intuit Alumni

I completely cashed out a ROTH IRA in 2017. The IRA was opened in 1999 with $2000. The amount cashed out was $2056. Why am I being taxed on the whole amount?

In order to be sure that you are taxed only on the earnings in the Roth IRA and not the original contribution, you must enter the basis for the account.  Use the information below to do so:

  • On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
  • This opens a box where you can type in “Roth IRA” (be sure to enter exactly as shown here) and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
  • The search results will give you an option to “Jump to Roth IRA
  • Click on the blue “Jump to Roth IRA” link

This will bring you to a screen with check boxes to indicate what types of account you had in 2017.  Be sure that Roth IRA is checked.  Click Continue

If Traditional IRA is checked or if you have a spouse that had either type of account, the next questions will not pertain to your Roth IRA.  Continue through this section until you are asked whether you made any contributions to your Roth IRA for 2017.  This is the beginning of the section where you will enter details about your Roth IRA, including the basis.

Continue answering the questions according to your situation.  On the screen where you see Let Us Track Your Roth IRA Basis, click Yes

Then, on the screen titled Enter Prior Year Roth IRA Contributions, this is asking for your total contributions for years prior to 2017 (basis).  If your basis exceeds your distribution, then the distribution will not be taxable.  If the distribution exceeds your basis, then the excess will be taxable.

Finish the rest of the follow-up questions about your Roth IRA. 





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