How to report withdrawl from Roth IRA

Forum|Forum|3 years ago
April 19, 2023
1 reply
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I withdrew 500$ from my Roth IRA account in 2022 and got form 1099R with distribution code as 8J. I put the 1099-R in TurboTax and it says that it might be subjected to taxes. I think it is because it doesn't know about my Roth IRA basis?

When I provide it my Roth IRA basis, it asks for Roth Contributions made prior to 2022. I entered 0 as I converted Traditional to Roth in Jan 2022 for year 2021 which I guess isn't a contribution? I have provided my traditional IRA basis to it and informed it about conversion from traditional to roth in Jan 2022 so it should have Roth IRA basis (verified that "IRA information worksheet" reports Roth IRA basis as 12000 (6k for each 2021 and 2022)). However, I don't understand why it is not deducting 500$ withdrawl from Roth IRA basis,

Best answer by DanaB27

Code 8J indicates a return of excess contributions plus earnings. The earnings are taxable and listed in box 2a. If you removed the contribution plus earnings before December 29th, 2022, and are under 59 ½ then the earnings are also subject to the 10% early withdrawal penalty.

Yes, you can withdraw contributions you made to your Roth IRA anytime, tax- and penalty-free. And that is why TurboTax asks you about your net contributions prior to 2022 and the conversions. But when you request the return of excess contributions plus earnings then the earnings will be taxable income. Please see Withdrawal of excess contributions for details.

Login to your TurboTax Account
Click on the "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”
Answer "Yes" to "Did you get a 1099-R in 2022?"
Enter Form 1099-R
Click "Continue" after all 1099-R are entered and answer all the questions.
Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Another reason" if you are over 59 1/2 (if you are under 59 1/2 and removed the excess on/after December 29, 2022, then enter it next to "Corrective Distributions made on or after December 31, 2022")

DanaB27Answer

Level 15

Login to your TurboTax Account
Click on the "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”
Answer "Yes" to "Did you get a 1099-R in 2022?"
Enter Form 1099-R
Click "Continue" after all 1099-R are entered and answer all the questions.
Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Another reason" if you are over 59 1/2 (if you are under 59 1/2 and removed the excess on/after December 29, 2022, then enter it next to "Corrective Distributions made on or after December 31, 2022")

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manishveAuthor

Level 2

Thank you for the answer!

I called my IRA trustee and they said that because when I pulled out money (upon realizing that I shouldn't have contributed due to income more than allowed for Roth IRA), I entered the reason code as excess contributions. So, my understanding is that I should report 500$ for 2022 Roth contributions and also report the withdrawl (including earnings) of it using 1099-R form, right? That way TT will not consider whole amount (500$) as taxable but only earnings?

For context, I didn't have Roth IRA account prior to 2022 so my basis is zero. In Jan 2022, I contributed in traditional IRA for 2021 and converted it to Roth IRA immediately.

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