No, do not enter the earnings from the excess contribution as wages. If the excess contribution was for 2020 then please follow these steps to create a 1099-R:
- Login to your TurboTax Account
- Click on the Search box on the top and type “1099-R”
- Click on “Jump to 1099-R”
- Select "I'll type it in myself"
- Box 1 enter total distribution (contribution plus earning)
- Box 2 enter the earnings of $56
- Box 7 enter P and J
- On the "Which year on Form 1099-R" screen say that this is a 2021 1099-R.
If you report it now in your 2020 return then ignore the 1099-R 2021 when it comes unless there is Box 4 Federal Tax withholding and/or box 14 State withholding. Then you must enter the 2021 1099-R into the 2021 tax return since the withholding is reported in the year that the tax was withheld. The 2021 code P will not do anything in 2021 tax return but the withholding will be applied to 2021.
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