I received a letter from the IRS today (it’s definitely a real letter from them, not a scam) saying that I understated my income in 2021 because I withdrew money from my Roth IRA. I took $40k from my account for the down payment on my house. I’ve always been under the impression that there is no penalty for withdrawing from the principle balance of a Roth IRA.
I’m looking at my 1099 form from Vanguard for this account, and the “taxable amount” line is blank. The next line for “taxable amount not determined” is checked, and the form instructions say it’s my responsibility to determine the taxable amount. Which again, I would’ve assumed was $0 since I was withdrawing from the principle.
I’m kind of freaking out here and would appreciate if anyone has any insights about this. I really don’t know if I’m in the wrong or not.
Submitted September 03, 2023 at 10:21PM by nobreaks57 https://ift.tt/TekiYRZ
