Dang, my taxes are a mess this year. I need some help understanding this.
In 2019 my Roth IRA contribution was limited due to high AGI. I elected to pay the penalty and then take a distribution in 2020 to set everything right.
However, the custodian sent me my distribution plus earnings, since apparently, that was what they do when it's before the tax deadline. As I understand it, this means that I need to amend 2019, claim the earnings as income, and then pay a 10% penalty on the earnings. Fine.
But Just now, I got an unrelated amended 1099, which had the effect of lowering my 2019 AGI so that I am now fully eligible for the Roth.
I entered this all into TurboTax, and I'm not sure it's showing up correctly on the forms.
1. Form 5329 Part I does not have the earnings, and does not apply the penalty.
2. Form 5329 Part IV shows the entire amount including the earnings as a distribution.
3. Form 1040 Line 4b does not show the earnings as income.
It's as though TT is considering the entire distribution, including the earnings as just a normal Roth distribution from my contribution basis, even though the Roth custodian considered it a corrective return of contribution. Is this correct?
