Yes, you will have to amend your 2023 tax return to report the earnings on your 2023 return.
On your 2023 tax return:
- Click on the "Search" on the top right and type “1099-R”
- Click on “Jump to 1099-R”
- Enter the 2024 Form 1099R
- On the "Which year on Form 1099-R" screen say that this is a 2024 Form 1099-R.
- Click "Continue" after all 1099-R are entered and answer all the questions.
- Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return".
Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2022" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2023.
You also have to enter the 2024 Form with code PJ on your 2024 tax return since you had taxes withheld. The withholdings are reported in the year that the tax was withheld. The 2024 code P will not add anything to your income on your 2024 tax return but the withholdings will be applied to 2024.
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