If I withdrew only my contributions from my roth IRA, why are some of it saying it's retirement income when I added my 1099-R info? None of what I withdrew were earnings.

[edlenfern]

So for example, if I contributed 18k within 5 years to my roth IRA accounts, and I only withdrew 15,900 I should not be having penalties or owe any taxes. How do I tell Turbotax that when I am filing my taxes?

[Vanessa A]

How old are you?  If you are under 59 1/2 years old, you would still be liable for an early distribution penalty of 10% unless you meet one of the exceptions for the penalty. As you walk through the interview questions after entering your 1099-R, you will be asked about the exceptions. 

If you are over 59 1/2 TurboTax will use your date of birth that you entered in the personal info section and the code in box 2 of your 1099-R to determine that your distribution is not taxable. 

[edlenfern]

Is this new for Roth IRAs? I was really under the impression that I can withdraw my contributions regardless of age and I will not be paying any penalties or taxes. Below is what I researched

1. Roth IRA Contributions: For Roth IRAs, you can withdraw your contributions (the principal amount you deposited) at any time, regardless of your age, without incurring taxes or penalties. This is a key feature of Roth IRAs and differentiates them from Traditional IRAs.

2. Earnings Withdrawal Rules: The 10% early distribution penalty and potential taxes apply to the earnings (not contributions) withdrawn from a Roth IRA if you are under 59 1/2 years old and do not meet certain exceptions. This penalty does not apply to withdrawn contributions.

[edlenfern]

Please note that I only withdrew my contribution, not any of the earnings!

[Vanessa A]

What is showing in box 1 and box 5?  Did you enter your contributions as more than what you have in box 1? Did you enter anything in any of the other boxes?

What is the code in box 7?

[edlenfern]

So I have three Roth IRA accounts, I am still waiting for my last 1099-R from a different financial institution. I currently have two 1099-R forms.

First 1099-R form:

- Box 1 - 9,900

- Box 2b is checked

- Box 5 has nothing

- Box 7 Distribution code is J

Second 1099-R form:

- Box 1 - 3,000

- Box 2b is checked

- Box 5 has nothing

- Box 7 Distribution code is J

Those are the only boxes that are filled out for both 1099-R forms

[Vanessa A · Accepted solution]

If you entered everything in your 1099, then continue through until you get to the questions asking if you owned it for 5 or more years, answer and keep going until you get to the question "Enter Prior Year Roth IRA Contributions". 

 If you had contributions of more than $12,900, TurboTax will remove all the taxes on the Roth.  If your contributions prior to 2023 were less than the $12,900 you withdrew, it will have you pay taxes on the excess as it is looking at it as distribution of earnings not just your contributions. Continue through to the end of that section. 

[edlenfern]

Ah, I did not realize there are follow up questions after entering the forms. Thank you for that! It looks better now!

[silverdj]

i have the same issue except it is fine with the Fed Return but my state (NJ) goes up through the roof as soon as i import my 2 1099-R's.  Can someone assist why NJ is making some or all of my withdrawal of principal taxable but the Fed isn't (as it shouldn't)?
Thanks

[BillM223]

Please review this New Jersey page on Roth IRAs.

As I read it, two things come to mind 

1. Were the contributions to the Roth IRA taxed by NJ before they went in?

2. Did you go though the NJ interview after entering the 1099-Rs?

@silverdj

[silverdj]

Thank you @BillM223 for your help, time and reply.

Yes my principal (contributions) invested in my Roth IRA was already taxed by NJ and yes I went all the way through the entire TurboTax process up to the point of doing the final review, checks etc.  I will try to do so again but I truly think there is a bug with TurboTax since my Fed isn't making it taxable but NJ is and as the link you provided states; 
"The New Jersey Income Tax treatment of Roth IRAs conforms to the federal treatment. Direct contributions to Roth IRAs are not deductible and qualified distributions from Roth IRAs are not includable in New Jersey income."

[DaveF1006]

To accurately to see how Turbo Tax treated your NJ Roth contribution, we would like to see a diagnostic copy of your return. The information in this file is a sanitized copy meaning there is no personal information, only numbers so that we can troubleshoot in depth, check for calculation issues, and to see how certain items are applied. In your case, this will be used to see how your Roth contribution were applied to your return. Here is how to order. 

For Turbo Tax online, go to tax tools>tools>share my file with agent.  When this is selected, you will receive a token number.  Respond back in this thread and tell us what that token number is. 

If you use the desktop version, go to the black stripe at the top of the program>online>send tax file to agent. Once you receive the token number, reply back in this thread and let us know what that token number is.

[silverdj]

Thank you @DaveF1006 .

I will do so when time permits me.

I wonder if this is why I'm getting taxed on some of my contributions/principal. In answering the NJ questions at the end, I noticed this (I have a code "J" in which Vanguard said all 1099-Rs have a code J from them).

 I'm guessing I need Vanguard to send a corrected 1099-R with no "J" in the distribution code?

Nonqualified Distributions are distributions not made under one of the four circumstances above and have Code J or T in box 7 of the 1099-R : or

Distributions made within the five-taxable-year period which began when you first contributed to your IRA.

If there is a Code T in box 7 of the 1099-R, and the distribution was made after the five-taxable-year period, it will be considered a qualified distribution and not taxable in New Jersey.

If there is a (1) Code J in box 7 of the 1099-R, and (2) the distribution was made after the five-taxable-year period, and (3) the distribution was allocated to a a first-time home buyer distribution as defined by the IRS, the home allocation will be considered a qualified distribution and not taxable in New Jersey.

[silverdj]

@DaveF1006 Token # is 119475. Thank you so much.

Its a bit confusing when it asks to  fill in some things both at the fed and NJ state level with regards to principal contributions etc so that too may lead to some errors but i still believe my NJ portion for the 1099-Rs shouldn't be taxed. Thanks again

[DaveF1006]

This is being received as from a 2021 tax return.  Is this correct or should this be from 2023?  if so, the token# should be 7-digits.  Would you go through the steps again to get a 7-digit number or if this is 2021, let us know and we will proceed to trouble shoot.

@silverdj

[Edited 02/22/22|3:15 pm PST]