Roth IRA early withdrawal how to report it in my taxes

[fmlwhy]

In CA

So last September I made a Roth IRA and put 1000$ in it. It wasn't "earned" income and I didn't know you couldn't do that so recently I took it out. The total amount is 1088 since I had a few shares in there. My question is what should I do on my taxes. I did not receive the 1099-R from my brokerage, since the the withdrawal was only a few days ago. So how would I report this on my taxes, and how do i pay the penalty or whatever. I am using XXXXX to file btw.

 

[adjusterjack]

From IRS Publication 590a:

Withdrawal of excess contributions.
For purposes of determining excess contributions, any contribution that is withdrawn on or before the due date (including extensions) for filing your tax return for the year is treated as an amount not contributed. This treatment only applies if any earnings on the contributions are also withdrawn. The earnings are considered earned and received in the year the excess contribution was made.

https://www.irs.gov/publications/p590a#en_US_2020_publink1000231024

And from 590b:

Withdrawals of contributions by due date.
If you withdraw contributions (including any net earnings on the contributions) by the due date of your return for the year in which you made the contribution, the contributions are treated as if you never made them.

https://www.irs.gov/publications/p590b#en_US_2019_publink1000231060

Looks like no tax, no penalty, and you don't have to report it.


Watch this space. If my interpretation is wrong, we have a tax attorney who participates here and will set me straight.

 

[davew9128]

From IRS Publication 590a:

Withdrawal of excess contributions.
For purposes of determining excess contributions, any contribution that is withdrawn on or before the due date (including extensions) for filing your tax return for the year is treated as an amount not contributed. This treatment only applies if any earnings on the contributions are also withdrawn. The earnings are considered earned and received in the year the excess contribution was made.

https://www.irs.gov/publications/p590a#en_US_2020_publink1000231024

And from 590b:

Withdrawals of contributions by due date.
If you withdraw contributions (including any net earnings on the contributions) by the due date of your return for the year in which you made the contribution, the contributions are treated as if you never made them.

https://www.irs.gov/publications/p590b#en_US_2019_publink1000231060

Looks like no tax, no penalty, and you don't have to report it.

Well there would be tax on the earnings.

 

[fmlwhy]

Okay, thanks you guys, I understand theres no penalties on the amount that I withdrew, but how would I go about paying taxes on the 88$ that I gained. Since I didn't receive a 1099-R, I cannot really input anything into XXXX. I talked with my brokerage support and they said that I would receive this form next year, but wouldn't I need to report the earnings for 2020? There were multiple buying and selling throughout 2020 and 2021, so it wasn't like I was just bought stock, and then held until now and sold and withdrew.

 

[Just Blue]

Stop posting the name of the tax prep company you are using. It isn't necessary to have that name in order to answer your question.

 

[cbg]

is what should I do on my taxes

So when you asked your tax advisor this, what did they say?

 

[fmlwhy]

Stop posting the name of the tax prep company you are using. It isn't necessary to have that name in order to answer your question.

I'm sorry about that, I thought it would be specific to my service, sorry about that

 

[fmlwhy]

So when you asked your tax advisor this, what did they say?

I do not have a tax advisor, if you mean the service that I was using to file online, should I be asking them? I wasn't sure if their customer service would be able to provide actual tax advice.

 

[adjusterjack]

Well there would be tax on the earnings.

If I had to take a wild guess, or if I was doing it, I would show it on Line 21 and the total of other income on line 22 of Schedule 1:

https://www.irs.gov/pub/irs-prior/f1040s1--2018.pdf

And on line 10a of the 1040:

https://www.irs.gov/pub/irs-pdf/f1040.pdf

 

[cbg]

Evidently my post was too subtle.

Stop expecting strangers on the internet who know nothing of your overall tax situation to tell you how to file your taxes and invest an hour with with someone qualified who can actually look at your numbers.

 

[quincy]

I do not have a tax advisor, if you mean the service that I was using to file online, should I be asking them? I wasn't sure if their customer service would be able to provide actual tax advice.

The “XXXXX” service you are using does not provide tax legal advice and the customer service feature available through the service comes at extra cost, which makes the “free” file less than free (although it still can be less costly than other online tax services).