1099-R box 2a Taxable Amount

ChiHoang · ‎03-14-2023

My client withdrew $12,726 from a Roth IRA she owns over 5 years, she contributed over the years $10,400, so her gain was $2,326. She got form 1099-R with distribution code J, and I entered in box 2a taxable amount $2,326. ProSeries picks up taxable amount of $12,726 instead of $2,326. Why ?

Do I do something wrong ? Thanks for your help.

Just-Lisa-Now- · ‎03-14-2023

You need to put in the basis, I think theres a quickzoom button right on the 1099R worksheet if you scroll down.

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Accountant-Man · ‎03-14-2023

Why is any amount taxable? And why code J?

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qbteachmt · ‎03-14-2023

The 5-year rule you are thinking of is not "that" Roth IRA, but having any Roth IRA open. The next 5-year rule has to do with contributions, and then there is one for conversions.

There are a bunch of rules for Roth distribution, including various 5-year rules:

https://www.investopedia.com/are-roth-ira-distributions-taxable-5220750

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taxes96786 · ‎03-14-2023

Possibly interest earned that taxes have not been paid on yet.

ChiHoang · ‎03-15-2023

Got it. Thank you so much.

qbteachmt · ‎03-15-2023

"Possibly interest earned that taxes have not been paid on yet."

Which is what happens in a Roth IRA when that distribution is not a qualified distribution. Look at the article I linked, to see the various parts that apply. Your taxpayer might have done something not eligible, or you have entered something incorrectly.

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