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Retirement tax questions
Yes, but sometimes it is your first encounter with contributions to a Roth IRA during retirement. You can only put money into a Roth IRA if you have earned income and not just retirement income from funds or SS. We didn't catch this until we were doing our taxes with Turbo Tax after Dec. 31st.
Now, it seems impossible to fix the right way.
In order to make the return of excess contribution amount and earnings on this excess amount of Roth IRA go into the right line of 1040 which is 4a and 4b using TurboTax , you have to make up a fake 1099-R for the year of the contributions and earnings since the one from the financial institution won't arrive until the following year. The only code for box 7 that would do this is Code 8 and checking the box of IRA/SEP/Simple. Code J is for Roth, but it is for early withdrawal of Roth funds which ours isn't an early withdrawal.
This is a mess that is consuming me as I like to do my taxes right and not have any issues. Why doesn't TurboTax have questions that steer you through handling the fact that you have to pay taxes on earnings of excess contributions to a Roth IRA in the year they were made. Advice has been to make up a Substitute 1099-R. The company will send us one in 2023 for 2022. But now they have sent a letter with the correct amounts of earnings on excess contributions for 2021 and have returned contributions and earnings in early 2022. I'm not comfortable with how I had to fix this.