topic TurboTax is calculating my Roth withdrawal as taxable. IRS does not. Withdrawal is contributions only. Account open since 2008. How do I fix NJ problem in Turbo Tax? in Retirement tax questions

TurboTax is calculating my Roth withdrawal as taxable. IRS does not. Withdrawal is contributions only. Account open since 2008. How do I fix NJ problem in Turbo Tax?

kej269 — Wed, 17 Mar 2021 21:40:02 GMT

Also, I am under 59.5.

Re: TurboTax is calculating my Roth withdrawal as taxable. IRS does not. Withdrawal is contributi...

DanaB27 — Sat, 20 Mar 2021 16:23:41 GMT

Yes, the withdrawal of Roth contribution is not taxable on the federal return.

Please make sure you answer all the Roth follow-up questions after you enter your 1099-R.

Login to your TurboTax Account
Click on "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”
Click "Continue" and enter the information from your 1099-R
On the "Your 1099-R Entries" screen click "continue"
Answer Roth follow-up questions

Roth distributions with code T and J are nonqualified distributions and are taxable in NJ. If you receive a nonqualified distribution from a Roth IRA, part of the withdrawal is taxable, and part is excludable.

In you NJ state interview you will enter your previous Roth contribution on the "IRA Information" screen.

Re: TurboTax is calculating my Roth withdrawal as taxable. IRS does not. Withdrawal is contributions only. Account open since 2008. How do I fix NJ problem in Turbo Tax?

kej269 — Mon, 22 Mar 2021 15:48:59 GMT

Thanks DanaB27,

Federal is fine. I don't have question on those.

It's the state that's the issue and I've found previous discussions of this with no clear answer, or I guess not the answer I want. 🙂 Basically even though NJ states that it does not tax contributions twice, essentially it does. Just wish all the financial "experts" who say you can access contributions tax and penalty free would disclose it is federal only. Glad to have learned this now with a relatively small amount.

Re: TurboTax is calculating my Roth withdrawal as taxable. IRS does not. Withdrawal is contributions only. Account open since 2008. How do I fix NJ problem in Turbo Tax?

fanfare — Mon, 22 Mar 2021 22:05:31 GMT

are you using the free edition?

this may not support your tax situation.

don't file an NJ return showing tax on your Roth withdrawal of Contribution.

what is your distribution code.?

the panel shown above is for the state return.

Re: TurboTax is calculating my Roth withdrawal as taxable. IRS does not. Withdrawal is contributions only. Account open since 2008. How do I fix NJ problem in Turbo Tax?

kej269 — Tue, 30 Mar 2021 15:39:29 GMT

Hi fanfare,

I am using the free version. Considering using the states free version and just doing them myself if it helps. Their tax guides are completely confusing as they say they do not tax twice...but this seems they do.

Distribution Code is J and Vanguard will not change it.