Question

Traditional IRA cash out

Forum|Forum|11 months ago
April 7, 2025
1 reply
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We cashed out a Traditional IRA this year. The amount invested was $10,000 post tax, filed form 8606, interest of $976. I am over 65 and Turbo Tax is saying I owe taxes on the full amount. I should only owe on the interest amount as I paid taxes on the original investment. Plus, it appears to be charging a 30% penalty. Help!

D

DavidD66

After you enter you Form 1099-R, you will be on the "Review your 1099-R info". Make sure you click on "Continue" from there. There will be a series of questions. One of those questions will be "Any Nondeductible Contributions to Your IRA". You need to answer Yes so you can enter your $10,000 of after tax contributions. On the next page you will enter $10,000. Continue through the questions. Your IRA distributions should now show only the $986 gain as taxable income.

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