@camlc wrote:
Hoping to get clarification statement:
You can just report it now and ignore the 1099-R when it comes unless there is Box 4 Federal Tax withholding and/or box 12 State withholding. Then you must also enter the 2021 1099-R into the 2021 tax return since the withholding is reported in the year that the tax was withheld.
The 2021 code JP will not do anything in 2021 but the withholding will be applied to 2021.
Does this mean that we shouldn't report it now, or just that we cannot ignore the 1099-R next year when we receive it? We know there will be tax withholding reported since we can see it was withheld via our transaction history for the excess contribution withdrawal.
Thank you in advance. This is the first time we've encountered an excess contribution situation and I want to make sure I understand.
If this was a 2020 excess returned in 2021 then the 1099-R code JP must be entered into an 2020 or amended 2020 tax return to report the box 2a amount.
If tax was withheld in box 4 then ti must also be entered into the 2021 tax return to apply the tax withholding.
That is why is does not make any sense to have tax withheld on a return of contribution that spans tax years. The contribution's earnings are taxable in the tax year that the contribution was *for* but any tax withheld can only be applied to the year that the excess was *returned*.
**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.**
