Apologies if this has been answered before, but there seems to be a lot of potential variation in people's situation. Here is the situation...
- Contributed to Roth IRAs for myself and spouse in March 2017.
- When preparing my 2017 return last year in February 2018, I realized that I ran afoul of the income limits and needed to resolve the situation.
- To resolve this, I removed the excess - the original contributions plus the calculated earnings for March 2017 - February 2018).
- I filed my 2017 return, following the various TT prompts and reported the contributions that had been made but were also withdrawn before the due date of the tax return (e.g., $5,500 contributed & $5,500 withdrawn each for me & spouse).
- Note: The removal of excess was not converted or recharacterized, it was just put into a brokerage (non-taxable) account.
- In February 2019, I received the 2018 1099-Rs for these "distribution" events which document the gross distribution, the taxable portion, and that $0 income tax was withheld (all correct). The distribution codes shown are: PJ.
When preparing my 2018 return, I entered the 1099-R information and TT informed me that I am supposed to amend my 2017 return. However, it also seemed to increased my tax bill for 2018. I am confused if I am supposed to handle this in my 2018 return or if I have to amend my 2017 return...
So, basically, I over contributed to Roths in 2017, then removed the money plus earnings in 2018 and haven't yet paid taxes on those earnings. I am not sure what I need to do to resolve the situation. Anyone know the procedure for this?
