I took out my basis in a Roth IRA. in 2012 . The 1099 Box 7 code was marked J . Tubo Tax taxed and penalized me. How do I fix.


    Code J indicate Early Distribution. For this there is a penalty

    • early penalty applies only to net GAINS in your account.. therefore, there has to be a way to enter the numbers so that there is no penalty.... THERE IS NO PENALTY TO TAKE OUT UP TO OR LESS THAN THE ORIGINAL CONTRIBUTIONS YOU HAVE MADE.  i think the 1099 forms distributed are Lazy, and dont give all infromation
    • Well it is important to see that the Form in the computer corresponds exactly to the paper copy in every respect. This goes without saying.
      There is a Five-Year rule on Roth withdrawals that can kick in and limit withdrawals.
    • Everything I've read about ROTH iras is that you have no penalty if you take out less or equal to how much you have contributed.   Regardless of when. Penalties only apply to net GaINS of your portfolio over your contributions.   You are not "double" taxed on your own money, only on the gains you take "early" prior to 60 years of age.    If you have put in 20 k over 3 years.   And you then take out 20k or less "early", you should have no penalties or taxes (especially if your Roth is 5 years old or more).   Therefore, code "j" or something else must be wrong in the form or in turbo.
    • In my case my Roth has been in effect since 2006, and I am still getting a refund deduction
    • fanfare is wrong .. there should never be a tax effect on withdrawing your basis
    • I stand corrected.
      I tried this on my own tax return.
      Even with code J, after responding to the follow-up questions on "my basis in the Roth", the taxable amount was zero.
      I guess you are on your own to keep track of the reduction in basis for future years.
    • was your refund affected after you went through the follow-up questions? I am currently on hold with turbo tax because when i my 1099 info (for a withdrawal of contribution only) my refund is reduced. Even after I go through the prompts and questions the refund amount does not return to the amount it was prior to my entry of the 1099 info.
    • It all looks correct.
      check l040 line 15b should be zero check 8606 line 22 should have your basis.

      If these are OK I figure TT knows how to do the arithmetic. YMMV
      since there are several questions your responses may have changed things
      Try deleting the 1099 and re-enter it.
    • P.S. The TT IRA info worksheet has the ROTH basis carry-forward information.
      All very complex.
    • I was half wrong .. if you take your basis AFTER five years of having the plan open it is not penalized or added to your taxable income .. however if you take out your basis BEFORE five years you the amount is added to your taxable income and you are assessed a 10% tax .. so sadly the tax man gets to double tax you
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