What I withdrew from my Roth IRA was simply my principle (contributions), why does it say I owe taxes and penalty fee?

[AnnetteB6]

You need to include the basis of your Roth IRA in TurboTax in order for the program to know that you withdrew only contributions.  

After you enter your Form 1099-R, there should be some follow-up questions to go through.  One of those questions will ask about Prior Year Roth IRA Contributions.  This is where you should enter the amount that had been contributed to the account.  

If you do not see those follow-up questions, then go to Deductions and Credits > Retirement and Investments > Traditional and Roth IRA Contributions.  

This will bring you to a screen with checkboxes to indicate what types of accounts you had in 2024.  Be sure that Roth IRA is checked.  Click Continue. 

If Traditional IRA is checked or if you have a spouse that had either type of account, the next questions will not pertain to your Roth IRA.  Continue through this section until you are asked whether you made any contributions to your Roth IRA for 2024.  This is the beginning of the section where you will enter details about your Roth IRA, including the basis.

Continue answering the questions according to your situation.  On the screen where you see Let Us Track Your Roth IRA Basis, click Yes. 

Then, on the screen titled Enter Prior Year Roth IRA Contributions, this is asking for your total contributions for years prior to 2024 (basis).  If your basis exceeds your distribution, then the distribution will not be taxable.  If the distribution exceeds your basis, then the excess will be taxable.