Client has a form 1099R with a code J in box 7 which states Early Distribution from a Roth IRA. Taxable amount is blank and it is marked that taxable amount is not determined. When the client withdrew the funds, he specificity requested only the funds that he had contributed so that there would be no tax. My tax software is taxing this Roth withdrawal, I believe based on the code J. Client spoke to AXA advisors and the rep stated that the withdrawal should not be taxable but the code J was listed on the 1099R due to his age which is 44. What am I missing? If the Roth withdrawal is taxed then he owes a lot of tax. Thanks for any advice.
You seem to be lost on the internet.
You’ve come to a Peer User community for Intuit Tax Preparation products supporting tax preparation professionals using ProSeries, Proconnect and Lacerte , and you may be looking for support as an individual taxpayer. Please visit the TurboTax Help site for support.
"but am at an impasse when it comes to Turbotax Free file. The current way has me paying the penalty."
The Software in use here is ProSeries; it's not going to help with TurboTax. It's completely different.
"Level Up" is a gaming function, not a real life function.
You need to open the IRA Information Worksheet and enter the basis (the amount of the Original contribution made) on line 23. This only makes the difference between withdrawal and the original contribution taxable. In my clients example, he originally contributed $6,000, it wasn't allowed, so he had to withdrawal it. When he withdrew it, the market was down and the balance was less than $6,000. So in this case, none of it was taxable once I entered the basis on the IRA information worksheet