I have a taxpayer that has had a Roth for many years. Recently the brokerage house changed so the new one does not have the basis of the contributions. He received an early distribution in 2020. The 1099 reflects Taxable amount unknown. How can I reflect the basis so the full amount will not be taxable and not subject to the 10% penalty.
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That's easy ------------------- just have him come up with his basis. Ok, maybe it's not that easy, but that is the only way to make it avoid potential tax.
Basis would be contributions. That means statements, transactions listings, and/or a transcript from the IRS for 5498 would all show the deposit amounts for each year.
"Level Up" is a gaming function, not a real life function.
Yes box 7 - J and Roth IRA box checked. I even entered the taxable amount with an explanation in 2(a).
Here is my scenario. $7,500 distribution but the brokerage indicated "Taxable Amount not determined". Basis is $5,634 and taxable it $1,936. On page 1 of the 1040 it shows $7,500 distributed and $7,500 taxable and is also calculating $750 penalty.
I actually redid the whole thing. If I enter the taxable amount $1,936 without the box J, it is reflected correctly everywhere, but as soon as I check box 7 J, then it taxes the whole distribution
Note to self ------------------------ when you can't come up with a good answer, questions can easily be solved by begging for cookies. 🍪🍪🍪