I’ve made an IRA excess contribution for tax year 2019. The excess contribution was done on July 1 2020 (before tax return filing deadline for 2019 tax return). I realized the mistake and got it removed by IRA administrator (FIDELITY) the next day on 2 july 2020. Hence, there were no earnings. I didn't mention about this excess contribution and reversal on 2019 Tax return. FIDELITY has now sent form 5498 and 1099-R 2020.
Please help with following questions:
1. 1099-R 2020 form has Distribution Code 81 in Box 7. Federal income tax withheld (Box 4) is empty. State tax withheld (Box 14) is empty.
2. What should i do with 1099-R? DO i have to amend 2019 Tax return or, use it for Tax year 2020?
3. If i use it in tax return for 2020, Turbo Tax is applying 6% penalty on excess contribution to State Tax. Is this expected?
Thanks for your help.
