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I had a rollover of an OLD Roth IRA from one institution to another. But Turbo Tax is telling me based on Box 7 (J) that I owe taxes on this rollover. It was never cashed

Either the 1099-R is wrong, or Turbo Tax didn't interpret the data. It did not ask if it was 'rolled over' directly, but I did select the Roll over option when choosing which 1099-R
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Accepted Solutions
Opus 17
Level 15
Intuit Approved! This answer has been verified for accuracy by an Intuit expert employee

I had a rollover of an OLD Roth IRA from one institution to another. But Turbo Tax is telling me based on Box 7 (J) that I owe taxes on this rollover. It was never cashed

Roth withdrawals are always taken in the order of contributions first, conversions second, and earnings last.  Earnings are taxable if you are under age 59-1/2, or if you are older but it has been less than 5 years since you first opened any Roth IRA.  Also note that a Roth IRA is not the same as a Roth 401k or 403b.  If you rolled over a Roth 401k or 403b into a Roth IRA, that 5 year clock starts all over again.

 

When withdrawing money from a Roth IRA (which is what code 7J indicates), Turbotax should be asking you for the total of all your past Roth IRA contributions, past conversions, and past withdrawals.  This applies to all the Roth IRAs you ever had, not just the current account.  (IRA means Individual Retirement Arrangement, and you only have one "arrangement" across your entire lifespan, even though you might have more than one account at the same or different brokers.)

 

If you entered zero previous contributions because you were thinking of this account and not your lifetime history, go back and change your answer.  If you don't know your contribution history, you can get the last 7 years worth from your tax transcript, or you might be able to contact the old broker.  If you don't know your contribution and withdrawal history, and get audited, you might be assessed tax because it is up to you to certify what your contributions and withdrawals are, the IRS (surprisingly or not) does not keep track for you.  

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1 Reply
Opus 17
Level 15
Intuit Approved! This answer has been verified for accuracy by an Intuit expert employee

I had a rollover of an OLD Roth IRA from one institution to another. But Turbo Tax is telling me based on Box 7 (J) that I owe taxes on this rollover. It was never cashed

Roth withdrawals are always taken in the order of contributions first, conversions second, and earnings last.  Earnings are taxable if you are under age 59-1/2, or if you are older but it has been less than 5 years since you first opened any Roth IRA.  Also note that a Roth IRA is not the same as a Roth 401k or 403b.  If you rolled over a Roth 401k or 403b into a Roth IRA, that 5 year clock starts all over again.

 

When withdrawing money from a Roth IRA (which is what code 7J indicates), Turbotax should be asking you for the total of all your past Roth IRA contributions, past conversions, and past withdrawals.  This applies to all the Roth IRAs you ever had, not just the current account.  (IRA means Individual Retirement Arrangement, and you only have one "arrangement" across your entire lifespan, even though you might have more than one account at the same or different brokers.)

 

If you entered zero previous contributions because you were thinking of this account and not your lifetime history, go back and change your answer.  If you don't know your contribution history, you can get the last 7 years worth from your tax transcript, or you might be able to contact the old broker.  If you don't know your contribution and withdrawal history, and get audited, you might be assessed tax because it is up to you to certify what your contributions and withdrawals are, the IRS (surprisingly or not) does not keep track for you.  

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