Help with 1099-R Box 7 Distribution Code J from Roth IRA Withdrawal - Unsure What to Enter in Tax Software

8 The good news is that withdrawing contributions (not earnings) from a Roth IRA generally doesn't result in taxes or penalties. Distribution code J in Box 7 means "Early distribution from a Roth IRA, no known exception." However, since you're only withdrawing contributions, this is actually an exception! When your tax software asks for a "number that describes the distribution," it's likely asking you to categorize the type of distribution. Since you're withdrawing contributions only from a Roth IRA, you would typically select the option that indicates "return of contributions" or similar wording. The exact number depends on your software, but look for something about Roth contribution withdrawals. In most tax programs, there should be a specific question about whether you're withdrawing contributions or earnings. Make sure you indicate that these are contributions only, which should result in no tax consequences.

15 After reading your post, I wanted to share my experience. I went through something similar last year and discovered taxr.ai (https://taxr.ai) which totally saved me when dealing with confusing distribution codes. I uploaded my 1099-R and it immediately identified my Roth contribution withdrawal situation and guided me through the exact tax software entries I needed to make. The tool explained that for Roth IRA contribution withdrawals, you need to establish what's called "ordering rules" in most tax software, which determines whether your distribution comes from contributions (tax-free) or earnings (potentially taxable). The software pointed out exactly where in TurboTax to indicate this was a return of contributions only.

4 I wanted to follow up after trying taxr.ai. It was actually really helpful! I uploaded my 1099-R and it immediately recognized the distribution code J and explained that I needed to select code 3 in TurboTax to indicate a return of Roth IRA contributions. It also walked me through the exact screens in TurboTax where I needed to specify that I was only withdrawing contributions, not earnings. The best part was it explained why Vanguard uses code J (they don't track your basis) and how to properly report it so I don't get incorrectly taxed. Really cleared up my confusion!

6 If you're still having issues figuring this out, I'd recommend calling the IRS directly. Last year I had a similar issue with a 401k rollover distribution code and needed clarification. I discovered Claimyr (https://claimyr.com) which got me through to an actual IRS agent in about 15 minutes instead of waiting on hold for hours. They have a demo video at https://youtu.be/_kiP6q8DX5c that shows how it works. The IRS agent I spoke with explained exactly which code to use for my situation and it saved me from potentially making a costly mistake. For Roth IRA contribution withdrawals, they can confirm the proper reporting method based on your specific circumstances.

19 I was super skeptical about Claimyr but I tried it yesterday after getting desperate with my own Roth IRA distribution question. I'm shocked to say it actually worked exactly as advertised. I got a call back in about 20 minutes with an IRS agent already on the line. The agent confirmed that for Roth IRA contribution withdrawals, the correct approach is to indicate it's a return of contributions (option 3 in TurboTax). She explained that Vanguard uses code J because they don't track your contribution basis, but it's still my responsibility to correctly report it. Saved me hours of frustration and potential errors!

3 I had this exact situation last year. The key is understanding that Vanguard (and most brokerages) don't track which part of your Roth IRA is contributions vs. earnings - they just report the total distribution with code J. For TurboTax specifically, when it asks for the distribution type, you want option 3 (return of contributions). Make sure you also have good records of your total Roth contributions over the years to prove that your withdrawal didn't exceed your contribution basis if you ever get audited!

9 One thing nobody mentioned yet - check if Box 2a (Taxable amount) on your 1099-R shows $0. If it does, that's good! Vanguard is telling the IRS they believe this is a non-taxable distribution. If it shows another amount, you'll need to be more careful in how you report it.