The code-J 2023 Form 1099-R indicates that you received an ordinary distribution, not a return of contribution. As such, only the $51 contribution is reportable on your 2022 tax return and, given that it was an excess contribution, is subject to a 6%, $3 penalty on your 2022 tax return, determined on Part IV of your 2022 Form 5329. The $51 carries forward to 2023 as an excess and as your basis in Roth IRA contributions. The 2023 Form 1099-R distribution is not reportable anywhere on your 2022 tax return.
In 2023 TurboTax, make sure on that the $51 appears on the IRA Information worksheet as an excess carried forward from 2022 and as contribution basis carried forward from 2022. You report the regular $154 distribution by entering the code-J 2023 Form 1099-R into 2023 TurboTax. This distribution will appear on line 20 of your 2023 Form 5329 to be subtracted from the $51 on line 18, reducing the excess to zero. The distribution will also appear on Part III of your 2023 Form 8606 where your $51 of contribution basis will be subtracted, resulting in $103 being subject to ordinary income tax and a 10%, $10 early-distribution penalty.
