@Emy95 wrote:
What do you mean by fabricate a 2025 1099R? I told TT I received a 1099R in 2024 (even though I’ll receive it next year) so I could input the information. After I entered the necessary info, clicked “2025”, “none of these apply to me” (when asked if need to file a substitute 1099R) I still have a 10% penalty on the earnings. Now, TT is saying I could reduce my early withdrawal penalty if I did the following:
It's not clear what you actually did. It is critical that you use codes P and J in box 7 of the 1099-R that you enter. That will tell turbotax this is a corrective distribution, and the earnings portion is taxable but not subject to the 10% penalty.
If you still get that same screen (you should not) enter the box 2A taxable earnings portion in the box labeled "Corrective distributions" (4th from the bottom). The program should be smart enough not to ask when you use code P and J, but if it does ask, putting the box 2A amount on that screen should remove the penalty.
Remember, enter a 1099-R as if you got one (not a substitute). Report the entire withdrawal in box 1 and the taxable earnings portion in box 2A, and codes P and J in box 7. No other boxes or codes should be entered or checked.
In January 2026, you will receive an actual 1099-R with the exact same information. File it with your important papers but do not enter it on your 2025 tax return.
