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fl182
Level 1

Amend return before October 2021 because of excess Roth IRA contributions in 2020

Hi,

 

I contributed to a Roth IRA in 2020 (and in 2021) when I shouldn't have done so because of income limits. My financial institution computed the realized gains and now I need to amend my 2020 return to reflect this. I have several questions about how to make this in practice:

 

1. How do I amend the return using TurboTax (that I used to prepare the return originally) to reflect this specific change? My financial institution said they would send a 1099-R in January 2021 but I think I need to amend the return now, or not?

2. It is my understanding that as long as I do this before October, the 6% penalty wouldn't apply. Is this the case? Is this something TurboTax will take into account?

3. What about the 2021 excess contributions? Should I simply wait until it's time to prepare the tax return next year?

Thanks.

2 Replies
macuser_22
Level 15

Amend return before October 2021 because of excess Roth IRA contributions in 2020

#1 see below for amend instructions.

 

#2 Correct.  If you filed the 2020 tax return on or before the May 17 dudate then you halve until Oct 15, 2021 ro remove the excess plus earnings.

 

#3 If removed per #2 then there is no 2021 excess.

 


You should *wait* until your return has been processed and you receive your refund or conformation that any tax due has been paid. (If you file an amended return while you first return is being processed it can cause extended delays for both returns if two returns are in the system at the same time). In addition, if the IRS makes any change on your original return, you might end up having to amend the amendment – a sticky process that can take a year or more).

-- Then you can start the amend process.

It is suggested that it be mailed certified with return receipt (or other tracking service) to verify that the IRS receives it. That is the only proof of mailing that the IRS will accept.

-- Amended returns can be mailed or e-filed - allow 8-12 weeks - can take up to 16 weeks (4 months) for processing.


See this TurboTax FAQ for help with amending:

https://ttlc.intuit.com/questions/1894381-how-to-amend-change-or-correct-a-return-you-already-filed

You can check the status of your amended return here but allow 3 weeks after filing for it to show up:
https://www.irs.gov/filing/wheres-my-amended-return


Enter the 2021 1099-R that should have a box 7 code JP in the 2020  amended return.   When asked say that it is a *2021* 1099-R, not a 2020.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
fl182
Level 1

Amend return before October 2021 because of excess Roth IRA contributions in 2020

Thanks @macuser_22! This is a really clear response even if I messed up my question and said that my financial institution said they would send me a 1099-R in January 2021 when I meant 2022, as all of this has happened during the current calendar year.

 

Last question: in your last line you said "Enter the 2021 1099-R that should have a box 7 code JP in the 2020  amended return.   When asked say that it is a *2021* 1099-R, not a 2020." I think here you corrected the mistake I mentioned above but just to be clear: when doing the amendment (say, tomorrow as I filed in March 2021), I should enter this 1099-R that I won't receive until next January, shouldn't I?

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