Turbotax

[waespym]

Deleted

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" then entered my total of "IRA Contributions Previously Taxed" which is equal to the distribution on the 1099-R"

"IRA Contributions Previously Taxed"  means shown and taxed on prior NJ tax returns, so your statement is incorrect.

Since this is your first distribution, the previously taxed amount is (usually) zero.

In future, you won't get that question again after the first NJ distribution, the worksheet doesn't call for it.

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for a regular IRA you can't say only contributions were taken out. it is not allowed.

for a Roth IRA you can say that, up to the point you use up all the contributions.

I'm not sure how NJ treats that (Code J) since I never took money out of a Roth.

Evidently TurboTax thinks the rule is different.

All the questions you described apply to Traditional IRAs.

This is not your first distribution from a Traditional IRA.

For Roth distribution, you should bypass those entries, backing out what you entered.

For example the total value all Traditional IRAs is not relevant.

TurboTax should not be asking you for that Traditional IRA information.

@waespym 

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All the questions you described look like those that apply to Traditional IRAs.

my first answer above was with Traditional IRA in mind.

Since TurboTax knows it is a Roth, maybe it asks similar questions,

but the calculation would be (or should be) different for a Roth, as you point out.

(The total value of all Roth IRAs at year end does not appear to be relevant.)

Sorry for any additional confusion caused by me jumbling Roth IRA and Traditional IRAs together.

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If TurboTax was asking about your Roth IRAs, all references to "IRA" should have been replaced with "Roth IRA'.

[waespym]

""IRA Contributions Previously Taxed"  means shown and taxed on prior NJ tax returns, so your statement is incorrect."

Actually it is not. It is asking me if my contributions were previously taxed. Since this is a Roth IRA they were. More information is available when clicking on "Contributions previously taxed"

• Contributions previously taxed include:
  • Contributions made to an IRA while you were a resident of New Jersey
  • Contributions that did not reduce the income on your federal return in the year they were made
  • Contributions that did not reduce state income in another state

Since this was a RothIRA these contributions did not reduce the income like contributing to a Traditional IRA would. If I set "Total of IRA Contributions Previously Taxed" to $0 then it actually increases this magical "Pension Income" to the full contribution/distribution amount. TurboTax is literally taxing me on unrealized gains hence why it's asking the value of my IRAs. If I set the current value of my IRAs to $0 all of this pension income goes away and the refund increases to the correct amount. 

[waespym]

"If TurboTax was asking about your Roth IRAs, all references to "IRA" should have been replaced with "Roth IRA'."

One page mentions the RothIRA distribution. The next says IRA. I have not filled out any forms for Traditional IRAs. On the second page it specifically says "this IRA" which is referring to the previous page discussing a RothIRA. 

[fanfare]

" If I set the current value of my IRAs to $0 all of this pension income goes away and the refund increases to the correct amount. "

It seems you have found the workaround you need, if it does not mess up your Federal tax return.

I have a similar issue with a Roth conversion (not TurboTax),

I am obliged to set the year end value of IRAs to zero to get the correct result, even though it is not a true statement. I don't think this setting goes through with the e-File dataset.

[STN802]

I had the same issue. Turbo Tax is trying to say that I owe a large amount of money for withdrawing contributions from my Roth IRA. Anyone can easily look up that these contributions were already taxed and can be withdrawn early at any time without tax or penalty. In addition, several options throughout that process were pretty poorly worded by Turbo Tax.

I ended up stopping my taxes with Turbo Tax this year and giving my business to H&R block instead.