About five years ago I opened an IRA using approx. $9,000.00 in "Taxed" money that I had in a savings account that I was closing.
About six months ago I closed the IRA account due to poor performance and received about $8,800.00.
The broker send me a 1099-R Form for tax year 2020 for a taxable amount of $8,800.00.
I don't understand why I need to pay taxes on this money since I have already paid the tax on it when it was earned.
Am I missing a form, etc.
Thanks for any help and/or direction.
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The broker doesn't know if you took a tax deduction for the contributions or not They have no way to know what your basis is. They are just indicating that it is a taxable distribution, but the amount you will be taxed on is dependent upon your cost basis. When you made the IRA contribution, you should have filed a Form 8606 - Nondeductible IRAs. This form notifies the IRS that you are making a non-deductible IRA contribution. Form 8606 is also used to report non-taxable distributions from an IRA. To trigger Form 8606 in TurboTax:
Thank you.
I gave it a try and once I filled out and saved the 8606 form it brought everything into line the way it should be.
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