topic Why is withdrawal of Roth IRA contributions showing as not taxable for federal but NJ is taxing a portion of it in Retirement tax questions

Why is withdrawal of Roth IRA contributions showing as not taxable for federal but NJ is taxing a portion of it

Orassam — Mon, 10 Feb 2025 15:13:59 GMT

I withdrew $5000 from my Roth IRA. I have had it open for 10 years and contributed $50000 to it , and it is now valued at over $100,000 (not sure why they asked for today’s value but I entered it). Form 1099 R had a J code, but after filling out my prior contributions, federal is exempting it, but NJ is still adding about $3000 to my income for the year even though it was just a withdrawal of contributions, not earnings. Why is this happening?

Re: Why is withdrawal of Roth IRA contributions showing as not taxable for federal but NJ is taxi...

RobertB4444 — Mon, 10 Feb 2025 15:30:26 GMT

Box 2a of your 1099-R should say zero if the $5000 that you withdrew was all principal that you had deposited. Make sure that that box is zero and you should be ok.

@Orassam

Re: Why is withdrawal of Roth IRA contributions showing as not taxable for federal but NJ is taxi...

Orassam — Mon, 10 Feb 2025 15:34:20 GMT

Box 2a on the 1099R is blank. The box in 2B that says taxable amount not determined is checked

Re: Why is withdrawal of Roth IRA contributions showing as not taxable for federal but NJ is taxi...

stur — Tue, 18 Feb 2025 15:38:10 GMT

i am having this same exact issue. All works well for federal but NJ is taxing me in it. Vanguard put code J and taxable amount not determined. Any further help with this?

Re: Why is withdrawal of Roth IRA contributions showing as not taxable for federal but NJ is taxi...

Glenn34 — Wed, 19 Feb 2025 04:03:16 GMT

Same here. You already paid tax on the contribution, NJ should not be taxing again. Regarding Intuit’s answer about box 2 being blank or zero, it does not solve the issue and they’re admitting they don’t know the answer. Do your state taxes on the state system. For NJ they instruct you not to add contributions as they have already been taxed. This is the 3rd time I’ve used TT with State and nixed the State filing directly on NJs tax website. You’ve got to watch TT. They’ll add thousands in some cases if you’re not careful.

Re: Why is withdrawal of Roth IRA contributions showing as not taxable for federal but NJ is taxi...

stur — Wed, 19 Feb 2025 11:50:29 GMT

I actually think I figured something out. the question where turbo tax asks me about "What are your contributions already taxes on this IRA - even though the IRA I have been talking aobut is more than two pages back - when I answer it based on the Roth IRA it works out.... It is very confusing because you would think that question would come right after the Roth IRA in question.. but it doesn't - it comes several pages later.

However, when Turbo then asks on the same page value of all IRAS on 12/31/2024 and what are the contributions for 2025... my taxes go way back up.... and I have no idea why it would ask that question or why it would make it go back up...

so far now I think I found a way around it that works....

Re: Why is withdrawal of Roth IRA contributions showing as not taxable for federal but NJ is taxi...

Orassam — Wed, 19 Feb 2025 14:16:14 GMT

@stur can you share what you found to work around it? I’m still having the same issue and waiting to file

Re: Why is withdrawal of Roth IRA contributions showing as not taxable for federal but NJ is taxi...

stur — Wed, 19 Feb 2025 17:06:32 GMT

In the NJ state program there will be a page after all the pages that deal with retirement income. The page does actually ask something like, “ how much of your contributions were previously taxed…” here I put in all my previous contributions - in which my case - was the one IRA that I only pulled contributions from. This worked and I was no longer taxed for that IRA withdrawal because the amount I withdrew was less than my contributions…