@JonBoy69 wrote:
"She has the option to have the contribution returned as " A return of contribution" before the extended due date with any earnings that attributed to the contribution that the IRS custodial should compute. Only the earnings would be taxable"
Its in her IRA at Bank of America. So if she does this, she would just initiate a transfer to her checking account and then she is free to redeposit it back into the same IRA as a 2021 contribution I assume. If the does this does she still have to declare it on the 2020 return as a non-deductible contribution? If BOA can return it as a return of contribution wouldn't they need to reissue the 2020 1099?
There is not 1099-R for a contribution. 1099-R's are only for distributions.
If she gets a "return of contribution in 2021 for the 2020 contribution then it will be issued on a 2021 1099-R that you will receive in 2022 with a code P in box 7. That will need to be reported on an amended 2020 tax return since the earnings reported in box 2a are taxable in 2020. (It"s a PITA but that is how the tax law works.)
**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.**
