ROTH ira

To be 100% tax-free, a Roth distribution must meet two criteria:

 

1. The account has been open for 5 tax years (which you've met).

2. You must be age 59½ or older, disabled, or using it for a first-time home purchase ($10k limit).

 

If you are UNDER 59½, only your contributions are tax-free. If you withdrew more than you put in, the excess (the earnings) is taxable.

 

TurboTax needs you to enter your "Roth Basis" to cancel out the tax. Follow these steps:

1. Search for 1099-R in the search bar and click the "Jump to" link.
2. Edit your Roth 1099-R entry. Ensure Box 2a is $0 and the IRA/SEP/SIMPLE box is checked.
3. Continue through the screens until you see: "Did you inherit this IRA?" (Answer No).
4. Look for a screen titled "Enter Prior Year Roth IRA Contributions" or "Roth IRA Basis."

You must enter the total amount of money you have ever contributed to your Roth IRAs over your lifetime.

 

For example, if you withdrew $10,000 but you have contributed $15,000 over the years, your basis is $15,000. Once you enter this, TurboTax will see that you are just taking back your own "already-taxed" money, and the tax will disappear from your 1040.

 

You should also check your 8606. Go to Tax Tools -> Tools -> View Tax Summary -> Preview my 1040. Look for Form 8606, Part III.

Line 22 should show your basis.

Line 25 should show $0 taxable.

The 1099-R form that I received, the IRA/SEP/SIMPLE Box is not checked. I don't see the question "Did you inherit this IRA?" not "Enter Prior year ROTH IRA Contribution" or ROTH IRA basis. How do I go about from here?