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Anne
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2421
Experience:  Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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About 6 months ago I talked to ANNE... if she can answer

Customer Question

About 6 months ago I talked to ANNE... if she can answer this that would be great. I was taxed on my ROTH distributions for the full amount. I paid it in 2013 so I need to get that returned to me. I have all of the transcripts from the IRS. What forms do I need to fill out. How do I know what I should be taxed on and how do I get the 2013 money back that I paid?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

...

I hold a JD (Juris Doctorate, a doctoral degree in the law),concentration in Tax Law & Corporate law, an MBA (specialization in finance & tax), and BBA from Stetson School of Business and Economics, as well as CFP and CRPS designations.

I can help here

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Expert:  Lane replied 1 year ago.

What you'll need to do is file an amended return

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This is done using form 1040X

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What's taxable will depend on the Roth taxation rules, which are based on age and amount of time that the dollars have been in the account.

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If you were over age 59 and 1/2, AND the dollars had been in the Roth IRA for 5 years, then NONE of the distribution should have been taxable.

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ON the other hand, if you were UNDER age 59 and 1/2 OR the dollars had NOT been there for 5 years then only your contributions would have been returned tax free (because the contributions into a Roth account are not deductible, they're made with after tax dollars, ... dollars on which you have already paid tax, (from your income, or possibly from having converted from a traditional IRA TO a Roth IRA, and paid the tax that's required at that time).

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So if you were under age 59 and 1/2at the time of distribution, its safe to assume that the amount that should not have been taxed is very simply the total amount that you had contributed to the Roth IRA at that time.

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This is because of what is called Roth the ordering rules ... When money is distributed from a Roth, the after tax contributions come our first.

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SO in that scenario - you pulled before age 59 and 1/2, you'll file the amended return, showing THIS time that the only taxable portion of the distribution is growth/interest in the Roth.

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let me know if you have questions

...

Lane

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Customer: replied 1 year ago.
Anne is online now can she respond
Expert:  Lane replied 1 year ago.

Sure thing ...She was not on and no one was picking up the question

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I'll opt out now ... but that doesn't guarantee that Anne will get the question

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Be sure to have her speak to the difference in the 5 years rule for conversions and contributions

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Opting out now

Expert:  Lane replied 1 year ago.

Hi again.

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It doesn't look like Anne ever responded ... Do you need further help here?

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Be glad to help ... and again I'll opt back out, but it looks as if your question was never picked up ... and that COULD be because there was, essentially, nothing to add ... although there are a couple more details.

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If you'd like I can also offer a phone consult which may help get through the details more quickly.

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I'll make the offer for the smallest amount possible ($5)

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Only accept if you'd like to go over this on a call

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If this HAS given you enough, (and you don't have any other questions on this), I'd really appreciate a positive rating(using those stars on your screen) … That's the only way I'll be credited with a portion of what you've paid JustAnswer.com

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But if you'd like me to opt back out and see if someone else will pick this up, I'd be glad to do that as well.

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Thank you, ***** ***** me know...

Lane

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Expert:  Stephen G. replied 1 year ago.

FYI - Anne isn't enrolled in the "Finance" category, that's why she's been unable to respond. Bob, she asked me to let you know she wasn't ignoring you.

Steve G.

Expert:  Anne replied 1 year ago.

Hi Bob

Thank you so much for remembering me. I had to ask the moderators to open up this question to the Tax field. Unfortunately, since I'm not an expert in the Finance dep't, I am not able to see those questions, even if I'm online.

So a huge thank you to you for your patience.

Lane did give you good information, and I'm sure that much of what I say will be a repeat of his answer. However, when answering questions here, it's difficult to come in the middle of someone else's answer, so please be patient for the repeat answers.

Lane was right in that you need to file a Form 1040X to correct the error (paying tax on your Roth distributions) in 2013,)

Here's the rules for Roth distributions:

First, you may ALWAYS take back your contribution to a Roth IRA tax free and penalty free.

However, whether or not the EARNINGS on your Roth IRA are tax free and /or penalty free depends on the amount of time that the money was invested in the Roth and your age.

1-if you're under the age 59 1/2, even if you opened your Roth IRA more than 5 years ago, you will pay a 10% penalty on the earnings

2-if you're age 59 1/2 or older, and your Roth IRA has not been open at least 5 years, you will pay a 10% penalty on the earnings.

3-If you're age 59 1/2 or older, AND your Roth IRA has been open at least 5 years, then there is NO penalty.

Please see below:

http://www.rothira.com/blog/the-five-year-rule-with-roth-ira-withdrawals

Ok, once you determine how much, if any, tax and penalty you should have paid on the Roth distributions, I'm sure you're next question is, how do I fill out the 1040X form.

You can't amend the tax return unless you know what that tax return said. The transcript will help you re-create your tax return if you did it yourself, or know how to do fill in your 1040.

So at this point, I need to know if you can recreate your return from the transcript, and if you know what your bot***** *****ne figure was (the $ amount you paid to the IRS), or if the information above was all of the information you needed in order to fill out the 1040X Form

I will be on & off of this website today, or if it's better for you, we can chat 12/27, (or later, depending on your schedule.)

Again, I truly appreciate your patience, and Merry Christmas Eve!