Form 1099-R. You will receive Form 1099-R indicating the amount of the withdrawal. If the excess contribution was made in a previous tax year, the form will indicate the year in which the earnings are taxable.
You will get a 1099-R 2021 in 2022 with codes P and J. This 1099-R will have to be included on your 2020 tax return and you have two options:
- You can wait until you receive the 1099-R 2021 in 2022 and amend your 2020 return or
- You can report it now in your 2020 return and ignore the 1099-R when it comes unless there is Box 4 Federal Tax withholding and/or box 14 State withholding. Then you must enter the 2021 1099-R into the 2021 tax return since the withholding is reported in the year that the tax was withheld. The 2021 code P will not do anything in 2021 tax return but the withholding will be applied to 2021.
To create a 1099-R in your 2020 return please follow the steps below:
- Open your return
- Click on the "Search" on the top and type “1099-R”
- Click on “Jump to 1099-R”
- Select "I'll type it in myself"
- Box 1 enter total distribution (contribution plus earning)
- Box 2 enter the earnings
- Box 7 enter P and J
- On the "Which year on Form 1099-R" screen say that this is a 2021 1099-R.
Yes, you will have to pay the 10% penalty on the earnings. This will trigger Form 5329 in TurboTax.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
