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chris-calero
New Member

I made a deduction from a Roth for medical expense, still owe a ton?

Turbo tax took away the 10% penalty, but I still owe $4K on a $13K withdraw and annual medical expense of $30K? What am I missing? Do I input anything on the "2016 previous IRA contribution" screen? (I haven't made a contribution since 2005. example didn't really help)
1 Best answer

Accepted Solutions
BMcCalpin
Level 13

I made a deduction from a Roth for medical expense, still owe a ton?

You should not owe tax on your original contributions to a Roth IRA, even if you may have an early distribution that taxes the earnings and penalizes you (although it sounds as if you solved that).

I am assuming that your distribution code was a "J" or a "Q", which would be appropriate for a Roth IRA.

On the screen in which you entered the original 1099-R information, there is a line that says:
"5 - Employee Contributions / Designated Roth Contributions or Insurance Premiums"

In this box, you should enter the amount of after-tax dollars that you have contributed to your Roth IRA. Why? Because these dollars are removed first (even in a penalty situation), and you won't pay tax on them. Click on the Learn More on this line to see the explanation.

If the line 5 amount is larger than your $13k, then you should not owe that $4k.

The line you are referring to above ("2016 previous IRA contribution") wants to know if you had previously contributed money to the Roth then withdrew part of it, so that TurboTax can redetermine your "basis" (your after-tax dollars in the Roth IRA that you initially entered on line 5 above).

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1 Reply
BMcCalpin
Level 13

I made a deduction from a Roth for medical expense, still owe a ton?

You should not owe tax on your original contributions to a Roth IRA, even if you may have an early distribution that taxes the earnings and penalizes you (although it sounds as if you solved that).

I am assuming that your distribution code was a "J" or a "Q", which would be appropriate for a Roth IRA.

On the screen in which you entered the original 1099-R information, there is a line that says:
"5 - Employee Contributions / Designated Roth Contributions or Insurance Premiums"

In this box, you should enter the amount of after-tax dollars that you have contributed to your Roth IRA. Why? Because these dollars are removed first (even in a penalty situation), and you won't pay tax on them. Click on the Learn More on this line to see the explanation.

If the line 5 amount is larger than your $13k, then you should not owe that $4k.

The line you are referring to above ("2016 previous IRA contribution") wants to know if you had previously contributed money to the Roth then withdrew part of it, so that TurboTax can redetermine your "basis" (your after-tax dollars in the Roth IRA that you initially entered on line 5 above).

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