@ziginnj wrote:
Hello. Thank you in advance. I tried to find this answer with no luck.
We have a Roth IRA and did not know about the income limitations. We overfunded by $300 in 2021 and by $20 in 2021.
We reached out to our broker and they will refund the excess.
I saw where in TurboTax to indicate in 2020 that I am receiving the money back. I entered that $300 was returned to me. I have not filed yet so I am clear there.
My question is they said my Excess Earnings on my Contributions for 2020 was $146.00 and for 2021 was $0.59. I am not quite sure what I should do with these numbers. Does the 2020 number go anywhere on my tax return?
Can anyone help? THANK YOU!!!!
@ziginnj -
To properly report this: if you requested a "return of contribution plus earnings" as it appears you did, and the 2020 excess was removed before April 15, 2021, then you shoukd receive two 1099-R forms in January 2022.
One should have the $300 2020 excess on box 1 and the $146 earning in box 2a with a box 7 code PJ. That will require that you amend 2020 to report the taxable earnings in the year that the contribution was for, not returned.
The other 1099-R should have a box 1 amount of $20 and box 2a of $.59 (rounds up to $1) and a box 7 code 8J that is reported on your 2021 tax return.
Only the $146 earnings is taxable in 2020 and only the $1 is taxable in 2021.
A returned IRA contribution or IRA distribution can NEVER be reported as "other income".
(Since you know the amount of the 2020 returned excess and the earnings, there is a way to create a "dummy" 1099-R to report it now on your 2020 tax return (if you have not already filed) that will avoid having to amend after receiving the 1099-R. in 2022 Post back if you would like the procedure.)
**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.**
