1. I am over 59 1/2. I assume I do not need to enter code for early distribution though it is a corrective withdrawal?
In Turbotax, starting by reporting that you made a Roth contribution. When the program tells you that is not allowed and considered excess, the program should guide you through the steps.
2. For mine, the distribution is done in 2024, but earnings were to be taxed in 2023. But my husband's contribution was done in 2024 for 2023 and the corrective withdraw happened in 2024. Do I only enter 1099R for mine or should I also enter his?
Unclear on the question. If you are withdrawing an excess 2023 contribution before the deadline (October 2024 if you have an extension), the earnings must also be withdrawn and reported as taxable earnings on your 2023 tax return, even though the actual transaction occurred in 2024.
3. I have earnings reported by the financial institute, the earnings should be reported in 2023 tax which I have yet filed (extension filed). I also did have federal tax withholding, but no state. (do I enter 1099 R in 2023 tax as well as in 2024 later on?)
Yes, you get credit for the withholding, see below.
4. No way of knowing whether the earnings were all capital gains or interest. The 1099R will not be available until 2025.
That doesn't matter. All earnings in a Roth IRA (if they are taxable at all, which depends on the circumstances) are taxed as ordinary income. There are no special rates for capital gains in IRAs.
5. I would like to report this in 2023 tax so I do not need an amendment later.
It must be reported on your 2023 tax return.
6. Do I need to consider to use a regular 1099R or a substitute 1099R since we don't have the form yet?
You will enter a substitute 1099-R form electronically in Turbotax. You do not create or need a paper copy.
7. I read discussions about code 8 vs P. Confused why some people say to use P in my scenario since the code says it is for year 2022. Is it because this 1099 R is going to be done for 2024, but we are reporting it in 2023 and interpret P as for previous year?
In Turbotax, create a substitute 1099-R for 2023. Gross distribution (box 1) is the total amount of the corrective distribution, both earnings and contributions. Box 2a Taxable amount is the earnings portion only. Box 4 is the federal tax withheld. For box 7, use code 8. This is how you get Turbotax to put the earnings in the correct place on form 1040. (If you were filing on paper not using software, you would not need a substitute form.)
At the end of 2024, you will get an official 1099-R from the IRA broker showing the same information, with code P again. Enter this 1099-R next year even though it is a "duplicate" of the substitute 1099-R. Code P on the official 1099-R will indicate "earnings on returned contribution that were taxable in 2023" so Turbotax will know not to tax it again. (But you need to enter the 1099-R even though it is not taxable, because the IRS will be looking for it in their matching system.)
If you also have an "official" 1099-R for ordinary (normal) withdrawals you made in 2023 separate from the contribution issue, you need to enter it as well, separately from the substitute 1099-R for the corrective distribution.
