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Get your taxes done using TurboTax
TurboTax is correct. It’s not income for 2021 because it’s not a distribution, it’s a return of an illegal contribution, and it is returned to be included your 2020 income.
If you earned interest on the illegal contribution, that should have also been returned to you and that would be 2021 income. It will be reported as part of your 1099-SA issued next year.
August 7, 2021
2:49 PM