In 2018 I contributed $5500 to a Tradition IRA. I did not realize it at the time that I was not eligible to make this contribution in that year and all of it would be excess contribution.
When I realized it would not be deductible, I asked the custodian to return the entire excess contribution of $5,500.
They promptly calculated the earnings and refunded the amount of $5,293.02. My earnings were negative because the contribution actually lost value during 2018. The excess contribution and earnings were returned in January 2019 (well before the due date of my 2018 return). On my 2018 return I did not show any IRA contribution because the entire contribution was reversed before the tax filling date.
The custodian did not issue me a 2018 1099-R, instead they have issued me a 2019 1099-R with a P distribution code (P--Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2018).
The 1099-R shows Gross Distribution (Box 1) of $5,293.02 and Taxable Amount (Box 2a) is blank. At the same time Taxable amount not determined (2b) is checked. This is actually not true, the custodian knows the earnings were ($206.98) but I think its easier for them to check 2b, leave 2a empty and be done with it. Also, I read somewhere that the IRS guidance doesn't allow a negative number to be reported on the 1099-R.
How do I enter this form into my amended turbo tax 2018 return? When I enter the gross distribution without a taxable amount it treats the entire amount as taxable which I don't think it should. I did not claim any deduction for the contribution so only the tax on the earnings should have any bearing to my 2018 return.
If I had any earnings on this excess contribution, I would have to pay tax just on that amount. Since I have a loss, shouldn't just that amount be deducted from my earnings of 2018 and reduce my tax bill?
Any guidance anyone can offer will be appreciated.
