Retirement tax questions

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@isnobrd58 wrote:

 

The questions I still have ....

1. Do I have to amend my calif state tax returns as well?

2.  Do I have to amend the 2021 federal /state again for the 2nd time in 2023 once I receive my 1099-R form showing a loss on earnings.  I am down the whole $5717 excess contribution and them some, so expect my earning to be zero.  If for some reason they are not and the 2022 form shows an earnings gain .  Do I need to amend again in 2023, for the newer excess I took in 2021 or is it better to wait to amend everything at once ?  I was thinking I might accrue more late fees and interest penalty?

Thank you

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#1)  I assume that you do. AFAIK CA follows Federal on this.

#2) No.   The 1099-R should just show the amount removed and when you enter it you say in the interview how much in prior year contributions you made.

You can always withdraw your own Roth contributions tax and penalty free.

Enter a 1099-R here:

Federal Taxes,
Wages & Income
I’ll choose what I work on (if that screen comes up),
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]

One of the followup questions will ask for your prior year** contributions not previously withdrawn. Those contributions that still remain in the Roth will not be taxed or subject to a early withdrawal penalty. That will add a 8606 form to your tax return with the Roth contribution and tax calculation in part III.

Note: **Prior year - any current year Roth contributions should be entered into the IRA contributions section. They will not show up in the prior years contributions but will be accounted for on the 8606 form that calculates the taxable amount.