By entering a substitute Form 1099-R you unnecessarily caused TurboTax to include the form in your 2021 filing despite the fact that the 2022 From 1099-R from Vanguard was neither late nor incorrect. That substitute form was a 2021 Form 1099-R with code 8 without the IRA/SEP/SIMPLE box marked suggesting a return of contribution made from a traditional account in an employer plan, not the proper 2022 Form 1099-R with codes J and P indicating the return of contribution from a Roth IRA in 2022. However, the required explanation statement would probably be sufficient to establish the nature of the distribution despite the incorrect coding.
The code in box 7 of the Form 1099-R and the year of the form indicate the year that the $2,880.71 must be included in income. Code 8 on a 2021 Form 1099-R and code P on a 2022 Form 1099-R both mean that the income is includible on your 2021 tax return.
When you perform a return of contribution, your tax return for the year of the contribution is required to include an explanation statement describing the transaction. This explanation takes the place of the Form 1099-R that you will not receive until later, so there is no need to enter the form as a substitute form. TurboTax prompts you to prepare the required explanation statement when you enter an excess contribution and then indicate that you will (or did) have some or all of the excess contribution returned.
I'm rethinking that there is no error on your 2021 tax return. If you were under age 59½ at the time of the return of contribution and that distribution was made before December 29, 2022, the $2,880.71 of taxable gains is subject to a 10% early distribution penalty on your 2021 tax return. The SECURE 2.0 Act eliminated the early distribution penalty for those under age 59½, but only for distributions made on or after December 29, 2022, the date that the SECURE 2.0 Act became law.
