I have taken a withdrawal from my Roth account. I am over 59.5 and the account is over 5 years old. The 1099 code is T. Why is it showing in TurboTax as income?

[kirkspresser]

The amount withdrawn is a small fraction of the account value. This is the first year I have taken money from my roth account.

[dmertz]

After clicking Continue on the page that lists the Form 1099-R that you have entered, 2024 TurboTax will ask if your first contribution was before 2020.  When you answer Yes, TurboTax will treat code T the same as code Q, will omit the distribution from Form 8606 Part III and will include the amount only on Form 1040 line 4a, not on line 4b as taxable.

[kirkspresser]

Thanks.  I appreciate the advice. 

[KeshaH]

Code T in box 7 of Form 1099-R is used when the payer doesn't know if the five year holding period for Roth IRAs has been met, so you will need to provide a bit of additional information to exclude the amount from taxable income.

To correctly report this distribution as nontaxable, follow these steps:

- After entering your 1099-R, click Continue on the Review your 1099-R info screen.

- Answer the questions related to disaster distributions, as applicable.

- On the Owned Any Roth IRA for Five Years? screen, choose "Yes" and click Continue.

- On the Were Any Roth IRAs Open? and Withdraw from Your Roth IRA Before 2024? screens, answer appropriately.

- Enter your net contributions on the Enter Prior Year Roth IRA Contributions screen. This will be the difference between all of your contributions and any distributions you've taken since opening the account.

- If you converted a traditional IRA to a Roth IRA, enter the details on the next few screens.

- If you made excess contributions to a Roth IRA, enter the details on the next few screens.

You will see the full amount of the distribution listed on the income summary screen, but it will not be included on taxable income on the tax return.