Yes, you do need to report the earnings in the year the excess contribution was made so these earnings do need to be reported in your amended 2021 return.
You do need to to report the 1099R received this year as this will prove that you withdrew the excess contribution. Usually the code that is reported on this type transaction is "P" in Box 7 and you will not be taxed on this 1099R.
To report the earnings in your 2021 return:
- Click Federal > Wages & Income>all income>
- Go to the last selection, Miscellaneous Income and click Start
- Go to the last option, Other reportable income and click Start
- When it asks, "Any other reportable income?" say yes and then type in a description and the amount to report it on your tax return.
- Under description, report it as Earnings From Excess IRA contribution and then the amount of the earnings.
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