I made a contribution $6500 to Roth IRA in Aug 2023.
I withdrew around $7000 from Roth IRA in Aug 2023 (after 1 week).
This is effectively zeroing closing the account , as it has zero balance and Im under 50.
How do we go about reporting this capital gains tax , while filing before April 15 2024?
Thank you in advance
As long as you were eligible to make the Roth IRA contribution based on your income and filing status, you would first enter the Roth IRA contribution information and then enter the Form 1099-R to report the distribution from the account.
The end result should be that you will pay income tax and an early distribution penalty on the $500 that exceeded your original contribution amount. It is not reported as a capital gain.
Go to Deductions and Credits > Retirement and Investments > Traditional and Roth IRA Contributions and click Start or Update to enter the Roth IRA contribution. Pay close attention to the information on the screen in case your income prevents you from being able to make the contribution. TurboTax will give advice about what to do next.
Go to Wages and Income > Retirement Plans and Social Security > IRA, 401(k), Pension Plan Withdrawals (Form 1099-R) and click Start or Update to get started with entering the Form 1099-R reporting the distribution.