Why is my $1,500 Roth IRA withdrawal taxed? It was from 2024 contributions (no gains). TurboTax won’t let me specify 2024 contributions. How to fix?

[johnnguyenex]

From my understanding, contributions to a Roth IRA can always be withdrawn tax-free and penalty-free, regardless of the 5-year rule, since they’re made with after-tax dollars. However, TurboTax is calculating $150 as a tax liability for this withdrawal. Here’s what I’ve done so far: I entered my 1099-R correctly. Box 7 shows a "J" code. I entered my Roth IRA contribution history, but TurboTax only asked for contributions before 2024, and I cannot specify my 2024 contribution. I selected "I did something else" when asked about rolling over the funds since this was a withdrawal, not a rollover.

[AnnetteB6]

Your understanding of the non-taxable nature of taking a distribution from your Roth IRA contributions is correct.  

Once you have entered your 2024 Roth IRA contribution, then your distribution from the Roth IRA should be non-taxable as long as it does not exceed your contribution.  

The steps needed to enter the 2024 Roth IRA contribution can be found in the following TurboTax help article:

Where do I enter my traditional or Roth IRA contributions?