Reporting distributions that were contributions Options

[jevd]

thank you. This isa Roth Ira. I put in $20,000 in contibutions over the years and it was valued at $23,000. I took out the $20,000(contributions) and was just trying to get advice on how to correctly report it. I know that I'm able to take them out at anytime.

Your welcome.
Does your software have a means to report it correctly? I'd ask for a refund if it doesn't.
Regards & Good Luck

[Eric.]

Re: You could say zero for distributions, then attach a letter to your return indicating that you had a Roth transaction but it was exempt from taxation because it was a withdrawal of contributions....in other words a work around for the software.
[/quote]


*Almost* : on your 1040, line 15A should reflect the entire amount of the distribution and then 15B (*taxable portion of* distribution) can then reflect zero - and you can attach your letter. As a CPA, I'm advising you - don't just reflect a zero in both boxes because you will stand a greater chance of the IRS coming back to you since you have a 1099 - that is ALSO in their system - that says you have an amount that should be reflected on your Return. Trust me, the IRS' first step will not be to look for the letter you attached. However, correctly reflecting both the dist. and the zero taxable number gives even the casual eye a tip off that you considered the number and didn't just skip reporting it (keep in mind, the IRS doesn't know what it is until after they have looked into it..). This highlighting is ONE OF the reasons (there are other reasons unrelated to this/your particular item) the form is setup that way.

No matter what, if this is just a straight-up 100% return of your contributions, you would be able to explain it away, so no disturbance to your wallet, but why open yourself to the potential associated hassle/holdup.

[K2retire]

What does your 1099-R show for the taxable amount of the distribution? What distribution code does it show? Is the "taxable amount not determined" box checked?

After you provide those answers I'll look in my copy of Tax Cut to see if I can figure it out.

[John G]

Eric, mea culpa! I should have looked at the reporting procedure before making my suggestion. I stand corrected about the better way to handle this.

Now if only someone who knows the software would post!

[Eric.]

John - happens, right? I had a client who brought in his prior year's Return and a letter from the IRS concerning the (this) Return that he never filed. ... Uhm, he hadn't put his name, address and SS# on the Return. Now those fields are a tad bit more obvious. Good stuff!

I haven't used this particular tax product so I didn't want to suggest - but as far as I'm aware, most of the do-it-yourself tax products work very similarly. Usually, if one clicks on the line item's field, where the numbers would belong, on the face of the Return (as opposed to the input forms), the program leaps to the correct input form and usually lands on the section of the input form or worksheet that relates to the box. The input form may likely have a check box available that says "Roth IRA - Return of Contribution"

[gzwick26]

Thank you very much for trying to help me. I'm going to try and figure it all out this weekend. I'll let you know how it works out. Thanks again.

[K2retire]

I've used TaxCut ever since it was created. If you'll answer the questions I asked on March 25, there is a very good chance I can figure it out for you. It most likely has to do with the way those fields on the 1009-R are completed.

[Bill Presson]

Thank you very much for trying to help me. I'm going to try and figure it all out this weekend. I'll let you know how it works out. Thanks again.

Sorry I missed part of the rules. I should have known better than to comment on IRA's.

[gzwick26]

My 1099-r.. box 2b is checked- taxable amount not determined....box 4 says... 88001375387 and box 7 says j.....

I only took out the contributions.... J says its an early distribution....when I enter the information on taxcut, it is treated as a huge penalty.. I don't see anywhere to report that it was simply a return of contributions.

[Bird]

I think you'll just have to override the software and put the full distribution on line 15a and 0 as the taxable amount on line 15b. Or contact Tax Cut to find out how to get to the same place. You're right about the (non) taxation of the distribution, but there's no way to report it as a return of contributions when you file; you simply say that it's not taxable.

[K2retire]

My 1099-r.. box 2b is checked- taxable amount not determined....box 4 says... 88001375387 and box 7 says j.....

I only took out the contributions.... J says its an early distribution....when I enter the information on taxcut, it is treated as a huge penalty.. I don't see anywhere to report that it was simply a return of contributions.

The amount in box 4 doesn't make sense -- that is supposed to be the amount of tax withheld.

In TaxCut enter the information from the 1099-R into the 1099-R worksheet. This will initially show the full amount as taxable. Then open form 8606. On line 22 enter your Roth basis as $20,000. The program will now show the full amount as NOT taxable.

[gzwick26]

thanks again for helpng... box 4 says 0.. thats the number or "code" going with it..... Is there an easy way to get to the form to enter the numbers you suggested? Thanks.

[K2retire]

The menu across across the top has a choice that says either "Forms" or "Open Forms". Make sure that "show all forms" is checked, not "show forms with data". Select the 8606, and scroll down to the appropriate line.

Or right click on line 15a of the 1040. Select "jump to related" then "Comes from 8606 line 7" then scroll down to line 22.

[gzwick26]

Im trying to input the info. on the form and it won't allow me. It's a return of contributions but it makes it very difficult to enter the info.. thanks for trying to help.

[K2retire]

It let me do it, so there must be something else checked that is preventing it. You can always override an entry by right clicking in the field. But if you do that you won't be able to e-file.