topic Reporting this distribution properly using TurboTax requi... in Retirement tax questions

Can I correct the distribution code for my 1099?

cmindia23 — Tue, 04 Jun 2019 19:09:39 GMT

The code issued is J, but should be Q. I am disabled and the ROTH IRA was more than 5 yrs old. I called to ask the institution to change the form but they told me that they do not ever issue code Q and would not change the form.

Code J is correct. By itself, having the Roth IRA for 5...

dmertz — Tue, 04 Jun 2019 19:09:41 GMT

Code J is correct. By itself, having the Roth IRA for 5 years is insufficient. [Edit] Provided that you meet the IRS definition of "disabled," your distribution is a tax-free qualified distribution.

Reporting this distribution properly using TurboTax requires using forms mode of the CD/download version of TurboTax. You must manually mark the box labeled "If box 7 code is J or T, check if a qualified distribution" on TurboTax's 1099-R Form for this distribution. Switch to forms mode, open the 1099-R form, then mark this box.

So the earnings are still taxable even though I am disabled?

cmindia23 — Tue, 04 Jun 2019 19:09:42 GMT

So the earnings are still taxable even though I am disabled?

Sorry, I missed the fact that you are disabled. Being di...

dmertz — Tue, 04 Jun 2019 19:09:43 GMT

Sorry, I missed the fact that you are disabled. Being disables *does* make this a qualified distribution; I'll update my answer. Keep in mind that, with regard to retirement distributions, being disabled means (Form IRS Pub 590-B):

"You are considered disabled if you can furnish proof that you cannot do any substantial gainful activity because of your physical or mental condition. A physician must determine that your condition can be expected to result in death or to be of long, continued, and indefinite duration."

This means furnishing proof to the IRS. Other organizations such as Social Security have their own separate definitions of "disabled."

Reporting this distribution properly using TurboTax requi...

dmertz — Tue, 04 Jun 2019 19:09:45 GMT

Reporting this distribution properly using TurboTax requires using forms mode of the CD/download version of TurboTax. You must manually mark the box labeled "If box 7 code is J or T, check if a qualified distribution." There is no way to mark this box when using the online version of TurboTax.

After marking this box, there will be no need for your ta...

dmertz — Tue, 04 Jun 2019 19:09:46 GMT

After marking this box, there will be no need for your tax return to include Form 5329. Open the 5329 form in forms mode and delete it.

See this FAQ on switching to the CD/download version of T...

dmertz — Tue, 04 Jun 2019 19:09:48 GMT

See this FAQ on switching to the CD/download version of TurboTax:

<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/1901476-how-do-i-switch-from-turbotax-online-to-the-turbotax-software">https://ttlc.intuit.com/questions/1901476-how-do-i-switch-from-turbotax-online-to-the-turbotax-software</a>

Given that the feature you need is not supported by the online version of TurboTax, you might be able to get a discount on the CD/download version of TurboTax by calling customer support.

You can achieve the result in TurboTax. After entering th...

Coleen3 — Tue, 04 Jun 2019 19:09:49 GMT

You can achieve the result in TurboTax.

After entering the Form 1099-R, click the Continue button on the Your 1099-R Entries. Answer Yes when asked if you opened a Roth IRA before 2013. That's all you need to do for this income to be treated as nontaxable income. The gross distribution amount will appear on Form 1040 line 15a or Form 1040A line 11a but the entire amount will be excluded from line 15b or 11b.

You will also need to indicate the disability if you are not 59 1/2.

Please note: A qualified distribution from a Roth IRA is tax-free and penalty-free, provided that the five-year aging requirement has been satisfied and one of the following conditions is met:

Over age 59½

Death or disability

Qualified first-time home purchase

A non-qualified distribution is subject to taxation of earnings and a 10% additional tax unless an exception applies. For Roth IRAs, you can always remove post-tax penalty contributions (also known as "basis") from your Roth IRA without penalty.

When you are entering this information into TurboTax, your Form 1099-R, box 7 codes J, Q and T identifies a Roth IRA distribution and determines the tax treatment. If you have a J or a Q, the distribution is considered taxable unless there is an exception. TurboTax will guide you on all the exceptions

(See the attached screenshot below. Click to enlarge.)

Ok I have done this and it still is counting the earnings...

cmindia23 — Tue, 04 Jun 2019 19:09:51 GMT

Ok I have done this and it still is counting the earnings on my original contributions as taxable even though I am disabled. Is this correct?

Re: Reporting this distribution properly using TurboTax requi...

cadwella — Sat, 03 Feb 2024 14:53:28 GMT

Thank you for this specific answer. Very helpful

Re: After marking this box, there will be no need for your ta...

cadwella — Sat, 03 Feb 2024 14:58:14 GMT

Thank you again. Additional information I didn't know until I read the IRS web site specific to form 5329 and you are 100% correct. Thank you!