1) Yes, code J is correct. The distribution was obtained too late to be able to be done as a return of contribution to avoid the 6% excess contribution penalty on the 2020 tax return. If the 2020 tax return did not include Form 5329 reporting the excess Roth IRA contribution for 2020, that form must be filed and the $60 penalty paid. The excess $1,000 contribution for 2020 carries forward to 2021 where it is again subject to a 10%, $60 penalty on a 2021 Form 5329. The code-J distribution in 2022 corrects this excess and will reduce the $1,000 excess carried into 2022 from 2021 to zero on the 2022 Form 5329.
2) Yes, codes J and P are correct for the return of the excess contribution for 2021. This return of contribution avoids any excess contribution penalty on the original contribution made for 2021.
3) If you have any excess contributions made for years prior to 2022, those would be corrected by making a regular distribution of exactly the amount of the excess with no adjustment for investment performance. You would also have to file a Form 5329 and pay the penalty for each year that there was an excess contribution in your Roth IRAs.
4) Yes, TurboTax informs you of an excess IRA contribution and prepares Form 5329 to assess the penalty, assuming that you enter the contribution and do not resolve the excess contribution before the due date of the tax return, including extensions.
