Hello, I am over 60 and self-employed. I usually deposit $5000 into my Roth IRA every January, which I did in January 2021. In late 2020, my husband sold a rental property and that profit bumped our income up so that I was forced to take a $2000 withdrawal from that IRA last year when I was doing our 2020 taxes. In other words, our income was too large for me to be able to make that full $5000 contribution for 2020. This $2000 was distributed to me in 2021.
Now that I am working on 2021 taxes, I have my 1099-R, showing that I withdrew the money.
On the TT screen showing IRA contributions, do I enter $3000 (my net contribution) or on 2 separate screens, show the $5000 inital contribution and the $2000 withdrawal (distribution)?
TIA for your help. If I need to provide more info, please let me know.
Thanks for clarifying. For 2021, you do not have to subtract out the $3000 (since it was returned you should get the 1099-R which would show the return of the money but only interest as taxable) so enter the full $5000 as the contribution. @squidlady
Just to clarify- Is this in the Deductions & Credits section? (see below). If you entered the $3000 on the 2020 tax return, you would not have to enter it again for 2021 (only any contributions you made for tax year 2021).
Hello there, it is in that section. I had to withdraw $2000 from the IRA in 2021 because when I was doing my 2020 taxes, TT told me I couldn't contribute the full $5000. (This was because of the unusual jump in income from hubby selling his rental house).
So I guess a better way for me to ask my question is (before I confuse MYSELF any more!) how does that distribution affect what I enter into TT for my IRA contribution for 2021?
Again - I deposited $5000 into the account in January 2021. I withdrew $2000 from the account in May when I was doing my 2020 taxes, on TT's instructions. What do I enter for my 2021 contribution? Thank you again.
Thanks for clarifying. For 2021, you do not have to subtract out the $3000 (since it was returned you should get the 1099-R which would show the return of the money but only interest as taxable) so enter the full $5000 as the contribution. @squidlady
Hi, yes the 1099-R shows the full $5000 contribution. Thank you very much!!
Hi, I'm sorry but I found I have another question related to this. I've had my Roth open since at least 2002. Since I had to take that $2k out last year, it appears TT is asking me to enter my prior year Roth IRA contributions. If I leave this blank, is there a problem? The error checker didn't point anything out, I've left it blank until today (and I've been running my taxes the last 2 days).
Do I really have to go back 20 years to find/enter all my contributions? Thank you in advance.
See Roth IRAs. You should not need the contribution amounts as everything is tax free when you take out the money under the terms designated- currently.