USA ROTH IRA Tax question

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Hi All,

I am new to this so I have a few questions.
Recently I have opened up an Roth IRA through Capital One Investing. So far for the 2014 year I have contributes about 4k. The way I was explained this work is that ROTH IRA is post tax so one does not have to pay taxes on the amount contributed and one also does not get a tax brake from ROTH.

However IRS is on my back because they got a 1088-R from CapitalOne that state that I have withdrawn 2500 to pay for a student loan. My question becomes why do I have to record that amount as my income if I already paid income taxes on that dollar amount?

In my case I have gotten a Bonus from work worth about 5k and as we all know IRS loves bonuses and I walked away with 2.6k of the 5k. Few days later I made a one time transfer to my ROTH of 2.5k and three months later I had to withdraw the amount to pay of student loan dept. So IRS wants me to pay more income taxes on the 2.5k. So basically I am getting taxed 75% on my original bonus amount.

All the research I did states that as long as I am not withdrawing the interests I should not have to pay taxes or penalties. I can at any time withdraw up to my maximum contribution for that year. So now I am being investigated for 2014 because I never reported the 1088-R from Capital One since I did not make any of that money with them.

Any tips would be highly appreciated
Thanks in advance
Zipp
 
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It is not clear what the issue is in what you provided. What does your 1099-R indicate the distribution was for (i.e., what codes are listed on it)? Did you make too much money to contribute to the Roth in 2014, and the IRS is asking about the excess contribution? Are you sure you didn't withdraw income earned in the Roth and did so before you satisfied the 5 year rule?
 
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What the issue is that in 2014 I contributed $5340 and for that year withdrew $2500. IRS wants me to pay income tax on that 2500 amount. However I already have paid income tax on the money I have contributed. As I understand that ROTH is post tax.

So here is what happens. Every two weeks I get paid. 3 days after I get paid I go into my roth account and transfer $150 into my ROTH account from my checking. Since I allready paid income tax on those 150 why do I need to pay again?
 

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