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To get Line 19 of IRS Form 8606 to calculate properly, enter the Roth IRA distribution on Form 1099-R. For box 7, Code J Roth Early Distribution may be entered. Box 2b-Taxable amount not determined should be checked, and 2b-total distribution can be checked, if applicable.

The gross distribution amount should then transfer automatically to Form 8606, Line 19. You can then enter the Roth IRA basis directly on Line 22. Only the gain will be taxable and the penalty is figured on the gain only.

To get the Roth IRA Contribution screen to come up to enter the Roth basis, Box 2b -Taxable amount not determined must be checked. The Box 7 code should be Code J Roth Early Distribution. The IRA box on the Form 1099-R may or may not be checked.

To enter or review the Roth IRA basis in contributions:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click the menu icon in the upper left-hand corner, then select Federal.
  2. Click Retirement Plan Income to expand the category and then click [Taxpayer or Spouse] Nondeductible IRAs (Form 8606)
  3. The program will proceed with the interview questions for you to enter or review the appropriate information

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