For 2020 we had a Roth Distribution of $44,000. Our basis was $30,000. Age was less than 59 1/2 at time of distribution. Line 7 code is T, so no penalty. Turbo tax shows no taxable income for this distribution. That is wrong. Taxable income is $14,000. How can we get Turbo Tax fixed.
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Is this an inherited Roth?
Code T is used when
The participant has reached age 59½,
The participant died, or
The participant is disabled.
If none of those apply and the code T is incorrect then contact the financial institution that issued the 1099-R for a corrected 1099-R. You cannot change it because the IRS receives a copy.
The Roth was inherited. My wife's first husband owned the ROth and died in 2005. I think the code T is correct. The Payer used the Code T on line 7 i for 2019 as well. My issue is Turbo tax is showing no taxable income. Can you help?
TurboTax is correct. Roth IRA distributions are not taxable and there is no early distribution penalty for an inherited IRA.
Since my wife Amy had not reached the age of 59 /1 2 at the time of the Roth distribution in 2020, I believe the distribution in excess of the basis is taxable. The Roth is considered a beneficiary Roth.
Thanks
@markncgolf wrote:
Since my wife Amy had not reached the age of 59 /1 2 at the time of the Roth distribution in 2020, I believe the distribution in excess of the basis is taxable. The Roth is considered a beneficiary Roth.
Thanks
Your age is immaterial. There is never any penalty on an inherited IRA.
IRS Pub 590B
https://www.irs.gov/publications/p590b#en_US_2019_publink1000231069
Other early distributions.
Unless one of the exceptions listed below applies, you must pay the 10% additional tax on the taxable part of any distributions that aren't qualified distributions.
Exceptions.
You may not have to pay the 10% additional tax in the following situations.
You have reached age 59½.
You are totally and permanently disabled.
You are the beneficiary of a deceased IRA owner.
You use the distribution to buy, build, or rebuild a first home.
The distributions are part of a series of substantially equal payments.
You have unreimbursed medical expenses that are more than 7.5% of your adjusted gross income (defined earlier) for the year.
You are paying medical insurance premiums during a period of unemployment.
The distributions aren't more than your qualified higher education expenses.
The distribution is due to an IRS levy of the qualified plan.
The distribution is a qualified reservist distribution.
Thank you for sending publication 590. I understand now. Thank you for your patience.
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