Thank you for the response, but that didn't really clarify anything for me.
I'm confused as to what the 2019 tax return would have to do with this situation. Why would I need to amend the 2019 tax return if my contribution made in 2020 was for the 2020 tax year, so earnings would be reported in 2020?
Here's what my understanding currently is:
- For 2020 Tax Year: Create the 1099-R and reflect the distribution and gain, entering code JP into Box 7, leaving the fed/state taxes withheld blank. Indicate the 1099-R is for the 2021 Tax Year when prompted. File our taxes.
- For 2021 Tax Year: We'll receive the 2021 1099-R for the 2020 excess contribution withdrawal returned in 2021. We'll enter the information as presented on the 1099-R, including the fed/state witholding. No need for amendment of 2020 Tax Return.
Is that the correct way to handle this. OR, in this situation is it better to just wait and file an amendment. The taxes have already been withheld, so whether or not having them withheld makes sense is a moot point.
Again, thank you. I just want to be clear on what the most clean/efficient course of action is for this situation.
