Follow the instructions below to enter the basis of your nonqualified Roth IRA distributions. This will also ensure that Line 19 of Form 8606 calculates properly.
To enter Form 1099-R (Distributions from Retirement Plans) into the program:
- From within your TaxACT return (Online or Desktop), click on the Federal Q&A tab
- Click Retirement Plan Income to expand the category, then click IRA, 401(k), and Pension Plan Distributions (Form 1099-R)
- Click Add to create a new copy of the form or click Review to review a form already created
- The program will proceed with the interview questions for you to enter or review the appropriate information
After you enter the distribution amount on the screen titled Retirement Plan Income - Distribution Amount, make sure the Taxable Amount Not Determined box is checked.
For the screen titled Roth IRA Distributions - Basis to appear in step 5, the correct codes need to be entered on the screen titled Retirement Plan Income - Box 7. For example, if the Box 7, Code J-Roth Early Distribution is entered, the basis screen will appear.
- When you return to the Form 1099-R Summary screen, click Continue and proceed through the additional Q&A questions until you reach the screen titled Roth IRA Distributions - Basis
- In the box for Basis in Roth IRA Contributions, enter the amount of your Roth IRA contributions made in previous years. Line 15b of your federal Form 1040 should now have the correct amount as taxable.