Roth IRA Form 1099-R, Code J - Did I withdraw contributions correctly from my 5+ year account?

The Code J on your 1099-R actually tells part of the story already! This code means your distribution is from a Roth IRA that's been open for 5+ years, which is good news for you. When you enter the 1099-R in FreeTaxUSA, there should be a section that asks about the "taxable amount" or whether the distribution is fully taxable. Since you're withdrawing contributions (not earnings), you'll want to indicate that none (or only part) of the distribution is taxable. FreeTaxUSA will typically walk you through some questions about your Roth IRA distribution. You'll need to specify that you're withdrawing contributions rather than earnings. Look for questions about the "basis" or "investment in the contract" - this is where you'll indicate the amount that came from your original contributions. Make sure you've been keeping track of all your Roth contributions over the years so you know how much you've put in total. As long as your $5,000 withdrawal doesn't exceed your total contributions, you should be able to take it out tax and penalty free.

After struggling with a similar situation last year, I discovered taxr.ai (https://taxr.ai) and it was a huge help for my Roth IRA withdrawal issues. It analyzed my 1099-R form with the same Code J and guided me through exactly how to report it correctly in my tax software. The tool showed me that with Code J, you need to fill out Form 8606 Part III to properly document that you're withdrawing contributions rather than earnings. What was especially helpful was that it explained exactly which boxes to check in FreeTaxUSA to ensure my withdrawal was treated as a return of contributions rather than a distribution of earnings.

Just wanted to update everyone - I tried taxr.ai that was mentioned above and it actually solved my problem! I was super skeptical at first (as you could probably tell from my question), but it really did help me figure out my Roth IRA distribution. It showed me exactly where in FreeTaxUSA to indicate that my withdrawal was from contributions. There's a specific screen after entering the 1099-R information where you need to select that the distribution was a "return of contributions" rather than a distribution of earnings. The system also helped me verify my contribution basis to make sure I wasn't withdrawing more than I had put in over the years. Honestly wish I'd known about this sooner - would have saved me hours of stress and confusion!

If you're still having trouble after trying to figure this out on your own, you might want to try Claimyr (https://claimyr.com). I had a similar Roth IRA issue last year with a Code J distribution, and after struggling with my tax software, I decided I needed to talk to an actual IRS agent to get a definitive answer. I was dreading the hours-long hold times, but Claimyr got me connected to an IRS agent in about 15 minutes. The agent walked me through exactly how to report my Roth IRA contribution withdrawals properly. They even explained the distinction between Form 8606 reporting for traditional vs Roth IRAs, which my tax software wasn't clear about. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c

I need to apologize and correct myself. After my skeptical comment above, I actually tried Claimyr out of desperation since I've been trying to reach the IRS about my own Roth IRA distribution question for weeks. It actually worked! Got connected to an IRS rep in about 30 minutes (which is miraculous compared to the 3+ hours I spent on hold previously). The agent confirmed exactly what others here are saying - with a Code J distribution from a Roth IRA, you need to indicate on Form 8606 Part III that you're withdrawing contributions rather than earnings. For anyone using FreeTaxUSA like the original poster, the agent walked me through it: when entering your 1099-R, make sure to select "Roth IRA" as the plan type, then there should be a screen that specifically asks if you're withdrawing contributions. Say yes to that question and the software will handle the rest correctly.

One thing that hasn't been mentioned yet is that you should really keep a running total of all your Roth IRA contributions over the years. I learned this the hard way! I use a simple spreadsheet that tracks: - Year - Contribution amount - Running total of all contributions - Withdrawals of contributions - Remaining contribution basis This makes it super easy at tax time when you need to figure out if you're withdrawing contributions or earnings. The IRS doesn't track this for you, so it's on you to maintain these records.

This might be a dumb question, but wouldn't it just be easier to call FreeTaxUSA support? I had this exact same issue last year and their customer service walked me through the exact screens where I needed to indicate I was withdrawing contributions and not earnings.

I went through this exact same situation last year with a Code J distribution from my Roth IRA. The key thing to remember is that with Roth IRAs, the IRS assumes you're withdrawing contributions first (this is called the "ordering rules"), so as long as you haven't exceeded your total contribution basis, you should be fine. When you get to the FreeTaxUSA screen for entering your 1099-R, make sure you select "Roth IRA" as the account type. Then there should be a series of questions about whether this is a qualified distribution, early distribution, etc. Look for the question that asks if you're withdrawing contributions - this is where you indicate that your $5,000 came from contributions rather than earnings. The software should automatically generate Form 8606 Part III for you once you indicate this is a contribution withdrawal. Just make sure you have documentation of your total contributions over the years to verify that $5,000 doesn't exceed what you've put in. If you're unsure about your contribution history, check with your IRA provider - they usually track this information.