How to properly report withdrawing Roth IRA contributions during 2025 tax filing?

You're right that you can withdraw your Roth IRA contributions at any time without taxes or penalties - that's one of the big benefits of Roth accounts. The reporting process is actually simpler than you might expect. Your brokerage will send you a 1099-R form showing the distribution from your Roth IRA. The form will show the total amount you withdrew, but it doesn't distinguish between contributions and earnings. That's where Form 8606 comes in - you'll need to fill out Part III of this form to tell the IRS that you're withdrawing contributions only. TurboTax should walk you through this when you enter your 1099-R. For documentation, keep records of all your past Roth contributions. This includes previous tax returns and any confirmation statements from your brokerage showing your contributions. These will help you prove the amount of contributions you've made if needed. Also keep the 1099-R you'll receive for the withdrawal.

I went through almost this exact situation last year and found https://taxr.ai to be super helpful. My brokerage sent me a 1099-R but it didn't clearly show what were contributions vs earnings, and I was stressed about accidentally paying penalties on money that should've been penalty-free. I uploaded my documents to taxr.ai and it identified exactly how much of my withdrawal was contributions and how to report it properly on Form 8606. The tool walks you through the whole process and explains what each box on the forms means in plain English. It even pointed out that I had been tracking my contribution basis incorrectly for years (which could have caused major headaches if I'd been audited). Definitely worth checking out if you're confused about IRA distributions!

I wanted to follow up about using taxr.ai for my Roth IRA withdrawal situation. I was skeptical (as you could see in my previous comment), but I decided to try it after getting frustrated with TurboTax's vague questions. It was actually really helpful! I uploaded my last few tax returns and my recent 1099-R, and it immediately identified that I was only withdrawing contributions and showed me exactly how to fill out Form 8606 Part III. What impressed me most was that it noticed I had made an excess contribution two years ago that I hadn't corrected (totally forgot about it), and it helped me understand the implications of that too. Saved me from potential penalties I didn't even know about. The interface was way more straightforward than I expected - definitely less confusing than trying to interpret IRS instructions on my own.

If you're struggling to reach the IRS with questions about your Roth IRA withdrawal (which I was when I had a similar situation), I'd recommend trying https://claimyr.com - it's this service that helps you actually get through to a human at the IRS without waiting on hold for hours. There's even a video showing how it works: https://youtu.be/_kiP6q8DX5c I had a complicated situation with my Roth where my 1099-R was coded incorrectly by my brokerage, making it look like I owed penalties when I didn't. I tried calling the IRS myself multiple times but could never get through. Claimyr got me connected to an IRS agent in about 20 minutes who confirmed I was reporting correctly and explained exactly what to do if I received a notice later. Seriously saved me so much stress and potentially money in incorrect penalties.

I have to eat my words about Claimyr. After basically calling it BS in my earlier comment, my Roth withdrawal situation got complicated when my brokerage coded my 1099-R incorrectly. After three failed attempts to reach the IRS (got disconnected each time after 1+ hour holds), I gave in and tried Claimyr out of desperation. The thing actually worked. I got a call back in about 35 minutes when they connected with an IRS agent. The agent confirmed that my brokerage had used the wrong distribution code and explained exactly how to handle it on my tax return. She also put notes in my account about the conversation in case I get a notice later. I still think it's crazy that such a service needs to exist, but when you need to talk to the IRS and can't waste entire days on hold, it's a legit solution. Just wanted to be honest after my skeptical comment earlier.

Something important that nobody mentioned yet - if you're withdrawing from a Roth that's less than 5 years old, there are some extra considerations. The 5-year rule can affect whether your earnings (not contributions) are qualified for tax-free withdrawal. Contributions always come out first and tax-free, but tracking the 5-year periods can get tricky if you have multiple Roths or have done conversions. Also, don't forget that your brokerage's 1099-R might have box 7 coded incorrectly. Mine coded my contribution withdrawal as "J" (early distribution) when it should've been "T" (Roth distribution exception applies). I had to attach an explanation to my return to avoid getting an automatic notice from the IRS.

Has anyone had experience with how Fidelity reports Roth IRA withdrawals? I'm considering taking some contributions out too and wondering if different brokerages handle the reporting differently. Do they all make it clear on the 1099-R what portion is contributions vs. earnings?

Maria, I completely understand the stress you're feeling - Roth withdrawals can seem intimidating but you're on the right track. Since you've been contributing for 3 years and want to withdraw $7,500 from $18,000 in total contributions, this should be straightforward. The key thing to remember is that you'll receive a 1099-R from your brokerage showing the withdrawal amount, but it won't specify that it's contributions versus earnings. That's where Form 8606 Part III comes in - this form tells the IRS you're only withdrawing contributions that you've already paid taxes on. For record-keeping, definitely save copies of your previous tax returns (Forms 1040) that show your Roth contributions on line 32, plus any year-end statements from your brokerage. These documents establish your contribution basis. Also keep the withdrawal confirmation and 1099-R when you receive it. One quick tip: when you make the withdrawal, you might want to specify to your brokerage that you're withdrawing "contributions only" just to be extra clear, though technically all withdrawals come from contributions first anyway. TurboTax should handle the Form 8606 pretty well - it usually asks straightforward questions about your total contributions and withdrawal amounts. You're doing this correctly by only touching contributions and leaving earnings alone. The paperwork might seem daunting but it's really just documenting what you already know - that this money was already taxed when you earned it.

Maria, I went through something very similar last year when I had to withdraw $6,000 from my Roth for an emergency car repair. The good news is it's much more straightforward than it initially seems! A few practical tips from my experience: First, when you contact your brokerage to make the withdrawal, specifically tell them you want to withdraw "contributions only" - while technically all withdrawals come from contributions first anyway, having this documented in their records can be helpful later. Second, ask them to email you a confirmation of the withdrawal details for your records. When tax time comes, you'll get that 1099-R form that shows the total withdrawal amount. Don't panic when you see it - it will likely show the full amount as a "distribution" without specifying it's penalty-free contributions. That's totally normal. Form 8606 Part III is where you tell the IRS the real story. One thing I wish I had known: keep a simple spreadsheet or document tracking your total Roth contributions by year. It makes filling out Form 8606 so much easier. I had to dig through three years of tax returns to reconstruct my contribution history, which was stressful during an already stressful time. TurboTax walked me through the whole process pretty smoothly once I had all my paperwork together. You've got this!

Maria, I completely understand your stress about this situation! I've been through a similar withdrawal process myself and want to reassure you that withdrawing Roth contributions is actually one of the more straightforward tax situations, even though it can feel overwhelming at first. Since you're only withdrawing $7,500 from your $18,000 in contributions, you're well within safe territory - no taxes, no penalties. The key thing to remember is that your brokerage's 1099-R will just show the withdrawal amount without distinguishing contributions from earnings, so you'll need Form 8606 Part III to tell the IRS this was a contribution withdrawal. For documentation, I'd suggest creating a simple folder (physical or digital) with: your last 3 years of tax returns showing your Roth contributions, any year-end brokerage statements, and the 1099-R you'll receive for this withdrawal. This gives you a complete paper trail if you ever need it. One practical tip: when you call your brokerage to initiate the withdrawal, ask them to note in your account that you're specifically requesting a "contribution withdrawal." While all withdrawals technically come from contributions first anyway, having this documented can provide extra peace of mind. You're making the right choice by only touching contributions and leaving your earnings to continue growing. The paperwork might seem intimidating, but TurboTax should handle most of the heavy lifting once you have your 1099-R in hand. You've got this!