Tax regulations indicate that CONTRIBUTIONS can be withdrawn at ANY time without penalty! This is the second year in a row that it shows I have to pay tax on my withdrawals. I have not taken anymore out than what I put in, in fact, it has been less. I have never taken out any "earnings," I never put money in from another IRA, and I have not contributed more than allowed.
In order to report on the tax return that your Roth distribution was from your contributions, you must enter the basis of the account.
Follow these steps to get to the screen needed to report the basis:
This will bring you to a screen with check boxes to indicate what types of account you had in 2016. 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 2016. 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 2015 (basis). If your basis exceeds your distribution, then the distribution will not be taxable.
Finish the rest of the follow-up questions about your Roth IRA.
See the picture below for a visual reference of the screen where the basis is entered.
In order to report on the tax return that your Roth distribution was from your contributions, you must enter the basis of the account.
Follow these steps to get to the screen needed to report the basis:
This will bring you to a screen with check boxes to indicate what types of account you had in 2016. 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 2016. 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 2015 (basis). If your basis exceeds your distribution, then the distribution will not be taxable.
Finish the rest of the follow-up questions about your Roth IRA.
See the picture below for a visual reference of the screen where the basis is entered.