Roth Taxed

[bekzm]

Have a 1099-R which shows distribution in box 1 but 0 in box 2. Taxable amt not determined and distribution code is J. In 2003 while married she had IRA - converted $3135 of the $14,475 so really confused and it looks like from prior papers from American Century that it all went into this Roth acct. So why is still taxing it on federal.... I thought roths were not taxing but the 10% penalty for pulling it out before 59 1/2 - someone help explain for this taxing and roths i guess.
Thanks

[David1980]

You probably need to enter the basis in the roth somewhere in your software.

It then will calculate the taxable amount on form 8606 part 3. Basically the return of contributions will be tax free, the earnings on those contributions will be taxed (and 10% penalized.)

[S T]

What if

I just happened to have received one of these.

So what happens if the total distribution is less than the amount that was originally contributed?

1099R is a code J with total distribution marked. Amount is $986, but the client had contributed $2,000 to the account in year 2000.

I understand no loss, so I guess there are no earnings either, so then no penalty.

I am also confused.

Sandy

[joanmcq]

Can take a loss as a misc itemized deduction subject to the haircut if all of his Roths were liquidated..

[veritas]

shave and a haircut 2 bits

Can take a loss as a misc itemized deduction subject to the haircut if all of his Roths were liquidated..

I like your way of putting things. Are you from Arkansas originally?