@butimnotachef wrote:
So the 1099-R that you would get in 2020, is the way that you would indicate that the excess amount in 2018 had been withdrawn? When starting this years return it automatically says there is an owed amount based off the 6% fee. Even when putting the 1099-R in, that amount is still mentioned as owed.
On the 1099-R, it only has the code J which I am guessing is since it was pulled after the tax filing deadline? It doesn't have the P - so does that mean the full amount that got pulled ends up being taxed as income?
This seems like a really big penalty and more than just the 6% on the original excessive contribution amount per year. Am I missing something?
The code J 2020 Form 1099-R reduces the excess from 2018 by the amount shown in box 1 of this Form 1099-R (but to no less than zero if the distribution was more than the excess). However, it seems that you have not yet entered your contribution basis. Make sure to click the Continue button on the page that lists the Forms 1099-R that you entered and enter or confirm your basis in Roth IRA contributions made for years prior to 2020, including the contribution basis added by the excess contribution. TurboTax will prepare Form 8606 to calculate of this distribution is subject to income tax and to an early distribution penalty. That amount should be zero if no more was distributed than the amount of your contribution basis.
