@ronr32 wrote:
I have read through the entire thread – many thanks to all contributors! This is my situation and intended actions….do I have this correct and please see my questions below.
I have not submitted my 2021 tax return. I have excess ROTH contributions made during 2021.
This is what I intend to do……
Enter information into TurboTax of my $7,000 contribution made on Jan 7 2021
Minimal 2021 earned income resulted in $6,498 being an excess 2021 Roth contribution
There is a Roth LOSS from 1/7/21 until date excess contribution withdrawn 3/14/2022 based on IRS’s NIA (net attributable income) formula
Under Personal/Deductions & Credits / Traditional and Roth IRA Contributions I will follow the TurboTax steps
Select Roth IRA
Enter $7,000 as Roth Contribution for 2021
Tell us if you contributed more to a Roth IRA than was allowed in 2021 – YES
Your excess Roth IRA contributions – enter $7,000
Roth Value on 12/31/2021 - enter $< value>
You have an Excess contribution of: $6,498
Contribution withdrawn before due date of you return - NOT CLEAR ON WHAT AMOUNT TO ENTER??? QUESTION: is the withdrawn amount the Net figure = total contribution less the Roth loss based on the NIA formula ($6,498)? OR the total contribution of $7,000??? I assume the net figure, but it is not clear to me based on the Turbotax question posed.
The above turbtax prompts precede entering the 1099-R as indicated below. This discussion thread does not seem to address the above trubotax prompts.
I will Manually submit a “2022 1099-R” with my 2021 return consisting of the following:
Box 1 enter $6,498
Box 2a enter $0
Box 7 enter J and P
QUESTION: is the foregoing correct?
*IF* you requested a return of contributions due to an excess contribution and the excess was removed before the extended due date of the 2021 tax return and the earnings were also returned and you know that the IRA custodian will report this as a return of contribution and not as a normal Roth distribution but as a return of contribution with a code "JP" in box 7 - then:
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 14 State withholding. Then you must also enter the 2022 1099-R into the 2022 tax return since the withholding is reported in the year that the tax was withheld.
The 2022 code JP will not do anything in 2022 but the withholding will be applied to 2022.
You would enter the 1099-R with the total distribution in box 1 (the contribution plus the earnings),
The earnings in box 2a,
Enter code "P" in box 7 (Top) - don t worry that it will say "taxable in 2019 "
Enter code "J" in box 7 (Bottom).
On the "Which year" screen say that this is a 2022 1099-R. - That makes it taxable in 2021 and not 2022
After the 1099-R summary screen press continue.
If you are over 59 1/2 then on the "Lets see if we can lower your tax bill" enter the box 2a amount in the "Another Reason" box to eliminate the 10% early withdrawal penalty on the earnings.
Enter the explanation for the excess contribution and that you are reporting a 2022 1099-R on your 2021 tax return to avoid having to amend in 2022.
The box 2a earnings will be taxable income reported on line 4b on the 1040 form and if under age 59 1/2 will also be subject to a 10% penalty on a 5329 form that will be reported on line 59 on the 1040 Schedule 4 form.
**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.**
