1099 R -filing for refund for Qualified Roth withdrawl

[Ohweeby]

I purchased my first home and withdrew portions of my principle from my Roth IRA to help with the down payment.    Thus I believe this is a qualified withdrawal.  The brokerage firm withheld federal income tax and I would like to file to get a refund.  On the 1099 R form box 2b it has taxable amount not determined.  Can you walk me through what to do 

[ColeenD3]

If you meet the qualifications, you can exclude the gain. The program will ask you about the exclusion. What is the code in Box 7?

You can always withdraw contributions (but not earnings) that you made to your Roth IRA tax and penalty free at anytime. Additionally, the Ordering rules for withdrawals from a Roth IRA are: first from regular contributions, then from Conversion and rollover contributions, on a first-in, first-out basis and finally from Earnings on contributions.

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 T, the distribution is considered taxable unless there is an exception. TurboTax will guide you on all the exceptions.

[Ohweeby]

In box 7 "J" is entered.  I am withdrawing just portions of my overall contributions and this is for a first time home purchase.  I have had this Roth for over 5 yrs.  I am younger than 59.5 yrs old.  What do I need to do from here? 

[DanaB27]

If you had your Roth IRA for 5 years or more then please follow these steps to enter your Form 1099-R and exclude up to $10,000 of your distribution:

1. Click on "Search" on the top and type “1099-R” 
2. Click on “Jump to 1099-R” and enter your 1099-R
3. Continue until "Did you use the money you withdrew to buy your first home?" and enter up to $10,000 under "this money was used to buy a home"
4. After entering all Form 1099-Rs click "continue" on the "Review your 1099-R info" screen
5. Answer the question on the "Owned Any Roth IRA for Five Years?" screen
6. Continue through the questions and make sure you enter the net contributions prior to 2021 on the "Enter Prior Year Roth IRA Contributions" screen

@Ohweeby

[Ohweeby]

This is very helpful but I withdrew 15,000.  My total principle contribution  in my Roth was $15,600 .   I thought I would be exempt from taxes even  up to my principle contribution.  From your response is only $10,000 eligible as non taxable?  Could you clarify please... THANK YOU SO MUCH!  

[DawnC]

You are exempt from tax, but not the penalty, at least not entirely.   You do not owe ordinary income taxes on the distribution - but you do owe the early withdrawal penalty on one-third of the distribution of $5k.     The exception for the first-time homebuyer will be exempt up to $10,000.   See- IRS exceptions.

[Ohweeby]

How do I check on the review portion of Federal Tax report generated by Terbo tax that this refund of $1,500 (10% of the 15,000 withdrawn ) was actually applied.  IE what line on my tax form reflects that?

You guys are awesome.  I need to go to work now but THANK YOU SO MUCH

[Ohweeby]

I thought one could withdrawal all of the principle contribution from a ROTH  at any time without penalty or tax implications ??? Is this not so?

[TxUser2014b]

@Ohweeby   Please see the link below.  It is very detailed what and why any penalty applies.

https://www.irs.gov/taxtopics/tc557

[DaveF1006]

Yes this is true except for two things.

• If you withdraw before 59 1/2, you will need to report the earnings as income plus a 10% early withdrawal penalty on the earnings.
• If you withdraw and did not meet the five-year holding requirement for the Roth, you will be taxed on the earnings in the account.  

@Ohweeby