TurboTax says I owe taxes on funds I received from a Roth IRA but the funds I received were from my regular contributions & should not be taxed. How do I work around it?

[lowerhay]

On my 1099-R from Edward Jones box 7 is a "J" and according to IRS Roth distribution rules there should be no taxes or penalties on funds taken out of my regular contributions even though I am not yet 59-1/2 years old. I don't see where TurboTax lets me specify that this money was from my regular contributions.

[macuser_22 · Accepted solution]

You can always withdraw your own Roth contributions tax and penalty free.

Enter a 1099-R here:

Federal Taxes,
Wages & Income
I’ll choose what I work on (if that screen comes up),
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]

One of the followup questions will ask for your prior year** contributions not previously withdrawn. Those contributions that still remain in the Roth will not be taxed or subject to a early withdrawal penalty. That will add a 8606 form to your tax return with the Roth contribution and tax calculation in part III.

Note: **Prior year - any 2018 Roth contributions should be entered into the IRA contributions section. They will not show up in the prior years contributions by will be accounted for on the 8606 form that calculates the taxable amount.

[GMW]

HI,

I have the same situation. I have come to the screen asking for Prior Year Roth IRA Contributions, but when I input the net contributions from before 2019 (all contributions minus the early withdrawal of JUST contributions I took after having had the account for 5 years), it says I still owe taxes and shows my income as $3000 more than what it should be. I have done the math a bunch of times and it should be straightforward. I shouldn't still owe taxes since I only withdrew less than my contributions... please advise!