Q: Do I need to go back and amend my 2020 tax return with this 2021 1099-R I have received?
Yes, you need to go back and amend your 2020 to report the earnings because the earnings are included in the taxable income for the year the excess contribution was made (2020).
Follow the steps here to amend your 2020 return:
- Sign in to TurboTax
- Scroll down to Your tax returns and documents, select 2020, then Amend (change) your return
- Enter the code JP 2021 Form 1099-R into 2020 TurboTax and telling 2020 TurboTax that it's a 2021 Form 1099-R will cause TurboTax to properly treat the amount in box 2a as taxable and subject to an early distribution penalty. If the box 2a amount was not already handled this way on your 2020 tax return.
Q: OR I will enter this 2021 1099-R with my 2021 tax filing?
Yes, you are correct. you need to file your 2021 1099-R with your 2021 tax return because there is tax withheld when you withdrew the excess contribution. BUT you do need to go back and amend your 2020 tax return to report the earnings on the excess contribution.
For help on how to enter 1099-R, see this article.
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