When it comes to Roth IRA withdrawals, the general rule is that they are not considered taxable income. This is because contributions to a Roth IRA are made with after-tax dollars, meaning you've already paid taxes on the money you put into the account. As a result, when you withdraw funds from a Roth IRA, you are not subject to income tax on those withdrawals.
However, there are some exceptions to this rule. If you withdraw earnings from a Roth IRA before you reach age 59 1/2 and the account has been open for less than five years, you may be subject to income tax and a 10% early withdrawal penalty on the earnings portion of the withdrawal. Additionally, if you withdraw funds from a Roth IRA that exceed the amount of your contributions, those excess funds may be subject to income tax and penalties.
It's important to note that while Roth IRA withdrawals are generally not considered taxable income, they may still need to be reported on your tax return for informational purposes. You should consult with a tax professional or refer to IRS guidelines for specific instructions on reporting Roth IRA withdrawals on your tax return.
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