Roth IRA Liquidation Loss

Forum|Forum|7 years ago
June 1, 2019
12 replies
53 views

I liquidated my Roth IRA for personal reasons in 2016. There was a fairly significant loss. However, I am unsure where this should be documented/reported on my taxes. Where is the best place to do this?

TurboTax Deluxe Online

null725

Level 13

If you have a loss on your Roth IRA investment, you can recognize the loss on your income tax return, but only
when all the amounts in all of your Roth IRA accounts have been distributed to you and the total distributions are less
than your unrecovered basis. Your basis is the total amount of contributions in your Roth IRAs.
You claim the loss as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit that
applies to certain miscellaneous itemized deductions on Schedule A, Form 1040. Any such losses are added back to
taxable income for purposes of calculating the alternative minimum tax.

dmertz

Level 15

This loss can be claimed only if you had a zero balance in all of your Roth IRA accounts on 12/31/2016. TurboTax automatically calculates this deduction and reports it on Schedule A when you properly enter your Form 1099-R as VolvoGirl indicates, click the continue button on the Your 1099-R Entries page, enter the amount of basis you had in Roth IRA contributions for years prior to 2016, and indicate that you did not have any Roth IRA accounts "open" at the end of 2016.

VolvoGirl

Level 15

You will get a 1099R for the distribution. You can just type 1099R into the search box at the top of your return, then find and it will give you a Jump To link to go right to it.

OR
Enter a 1099R under
Federal Taxes Tab
Wages & Income
Choose Jump to Full List -or I'll choose what I work on,

Then scroll way down to Retirement Plans and Social Security,
Then IRA, 401(k), Pension Plans (1099R) - click Start or Update

Pick the right kind of 1099R you have and on the same screen be sure to pick which person it is for if you are filing a Joint return.

After you enter the 1099R be sure to answer all the follow up questions on the next screens to determine how much is taxable or not. Go all the way to the end of the section. You have to enter it from the 1099R because there are codes on it you need to enter properly.