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Retirement tax questions
It depends. First of all, the second 1099R that show the return of contribution, that should have a Code 8 in Box 7 showing that it is a return of contribution taxable in 2021. As a result, this 1099R is not taxable income. Now you need to tell Turbo Tax you returned this contribution and you do this by:
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Federal Taxes>deductions and credits>choose what you work on
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Go to Retirement and investments>Traditional and Roth IRA Contributions
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Select Update
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Make sure the contribution reflect the amount of the contribution that was made for the account.
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As you navigate through the questions, you will reach a screen that says, "Your XXX contribution is too high. When you reach this screen, press continue.
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This next screen tells you have a penalty but gives you an option to return the excess portion of the contribution. Here is where you input the excess contribution that was given back.
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