The contributions had been in my Roth IRA for longer than 10 years.
A withdrawal of contributions from a Roth IRA is not supposed to be taxed. After confirming the information from my financial institution was correct in Turbotax, then answering the following questions, I was sent to the next part of my taxes, with my amount owed to the federal government being substantially more than it was before entering the IRA withdrawal information. Turbotax is taxing me 25% of my withdrawal & shouldn't be. Please advise on how to proceed to get this corrected.
Click the Continue button on the page that lists the Form 1099-R that you have entered and, when asked, enter your basis in Roth IRA contributions and, if any, Roth conversions. TurboTax will prepare Form 8606 to calculate the taxable amount of your distribution and, if your basis in Roth IRA contributions is more than $8,000, the taxable amount will be $0. With $0 being taxable, the $8,000 will be included on From 1040 line 4a but will be entirely excluded from the taxable amount on line 4b.
Click the Continue button on the page that lists the Form 1099-R that you have entered and, when asked, enter your basis in Roth IRA contributions and, if any, Roth conversions. TurboTax will prepare Form 8606 to calculate the taxable amount of your distribution and, if your basis in Roth IRA contributions is more than $8,000, the taxable amount will be $0. With $0 being taxable, the $8,000 will be included on From 1040 line 4a but will be entirely excluded from the taxable amount on line 4b.
& what is my basis of Roth IRA contributions? Do you mean if I can get back in, I should enter the total amount of money left in that account or the money left + the money I withdrew?
@catsci06 wrote:
& what is my basis of Roth IRA contributions? Do you mean if I can get back in, I should enter the total amount of money left in that account or the money left + the money I withdrew?
Box 2b being checked means that your broker does not know (or will not attest) to the amount of contributions. Only you know that.
When entering a 1099-R with code J, Turbotax will know it is a Roth IRA and will ask you to tell it the amount of your contributions (over your lifetime), the amount of conversions (if any) and the amount of previous withdrawals. You need to keep track of these things. If you did not, you have no way to prove to the IRS whether you are withdrawing contributions or earnings.
Go back to the screen for 1099-R income and click "review" or "revisit". You should see a list of 1099-Rs that you entered, and a button to add a new one. Click "delete" next to the 1099-R for this Roth IRA. Then click "add new" and re-add the 1099-R, paying attention to the questions about your previous contributions and withdrawals.
"or the money left + the money I withdrew?"
Neither.
The money you just withdrew may be part of contributions unless you already used up all your contributions in prior tax returns.
Only you (and IRS, if reported correctly) know how much of contributions is used up.
P.S. IRS knows the total of your contributions from Form(s) 5498.