Q1. No, only earnings from excess contributions are taxable but you had a loss therefore this will not change your taxable income. If you decided to file an amended 2020 return it would be for information only but not a taxable event. Please see Do I need to amend? and How do I amend my 2020 return? for additional information.
Q2. No, the code is PJ is correct. Only earnings are taxable and if you had earnings, you would enter the exception for the person over 59 ½ like below (a person under 59 1/2 would have to pay the 10% penalty on the earnings). But you had a loss therefore this doesn’t apply to you.
- Click on the "Search" on the top and type “1099-R”
- Click on “Jump to 1099-R” and enter your 1099-R
- Click "continue" after all 1099-R are entered and answer all the questions.
- Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount under "Another reason".
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