Confused on Taxing of Roth Distribution

Forum|Forum|2 years ago
January 26, 2024
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I took a ROTH IRA distribution this year of of $14,255. I had made previous contributions and distributions over the past 9 years that totaled $12,690 so I knew I would owe tax (and a penalty) on the difference but I don't understand why the entire $14,255 is being considered taxable income in general on my taxes. I paid tax on the contributions before I put them in the ROTH so why am I paying taxes on the entire withdrawal and not just the amount that I am drawing from the growth? That seems like double taxation to me. Thanks!

Brian

Best answer by dmertz

You must click the Continue button on the page that lists the Forms 1099-R that you have entered. When TurboTax asks, enter your $12,690 basis in Roth IRA contributions.

dmertzAnswer

Employee

You must click the Continue button on the page that lists the Forms 1099-R that you have entered. When TurboTax asks, enter your $12,690 basis in Roth IRA contributions.

wisebri224Author

I did. It told me I would only be penalized on the excess but it’s still placing the whole withdrawal amount in my taxable income.

dmertz

Employee

I can't see your tax return, but I assure you, it's not. If TurboTax was treating the entire amount as taxable, it would also be reporting the entire amount as being subject to penalty. The entire gross amount is "income" in that it must be reported on your tax return, but only the taxable amount of $1,565 is appearing on line 4b of Form 1040.