Hello, I have a frustrating predicament. I had an excess contribution for tax year 2020 and I withdrew the excess contribution in 2021 to be just the exact amount I was calculated to be in excess by (I let my brokerage firm sort out calculating the losses or earnings). This year (2022), I received the 1099 dated for 2021 but it applies to tax year 2020. It had reported a gross amount which includes the excess contribution plus earnings.
I proceeded to amend my 2020 tax year forms but noticed that turbo tax calculated that I still owe a 6% penalty on excess contributions. I am guessing right now that since I had earnings, it got added as additional income and therefore the excess amount I removed initially was based on total income before the earnings was calculated and then reapplied with this amendment.
May I get some clarity if this calculation is correct? I otherwise fear that I have put myself in a far more complicated tax situation just because I didn't know what exact amount I needed to withdraw. There isn't an easy way for me to figure out in advanced if I lost or earned money (I didn't know I needed a 1099-R at the time).
Will I need to make another withdraw and apply it to the 2020 tax year?
Thank you for your time.
