@uk05 wrote:
Thanks for the guidance, macuser_22.
Since I've already filed my 2020 tax return, should I file an amendment for it this year before the deadline (i.e. once it's been accepted / rejected by the IRS & the option is available in TurboTax), or wait until Jan 2022 when I get the associated 1099-R that breaks everything down?
If the latter (Jan 2022), I would be filing three returns, correct?
2019 - 1040X (amend)
2020 - 1040X (amend)
2021 - 1040
Would that include both federal & state?
And does it matter that during the 2019 & 2020 year I lived / worked in Illinois, but in Jan 2021 when I withdrew the funds via the excess contribution I now live / work in Indiana?
I neglected to add to my previous answer that the 2019 6% penalty repeats each year until the excess is removed. Because the excess 2019 was not removed until 2021 then the 2019 excess will generate a separate 2020 6% penalty. You need to also enter the excess in the 2020 Roth contribution interview and say it was NOT removed in 2020 on you 2020 tax return or amended 2020 tax return. (I overlooked that you said the 2019 excess was removed in Jan 2021 - a carry-over excess from 2019 goes on a calendar year basis so had to be removed before Dec 31, 2020 to avoid a 2020 6% penalty).
The 2019 can be amended anytime since the only only change to the 2019 is to pay the 5329 penalty and the sooner it is paid, the sooner the interest will stop. The 2019 excess distribution only goes on the 2021 tax return and will not be taxable.
**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.**
