1099-R (2024) with PJ distribution code - turbotax is telling me to amend 2023. I want to verify why/whether this is needed.

[welovedoingtaxes]

1099-R (2024) with PJ distribution code - turbotax is telling me to amend 2023. I want to verify whether this is needed. I had excess Roth IRA contribution for 2023, which I subsequently had my broker withdraw (requested before tax deadline, but seems to be processed afterwards). As a result, on my 2023 tax return I did NOT put down the excess Roth IRA contribution. Some additional details is that there's 500$ taxable income income and 50$ federal tax withholding on the 1099R. Do I still need to amend my 2023 tax return? If I do, what parts would I amend exactly? & Would I also need to put the 1099R on my 2024 taxes? Thank you.

[DanaB27]

Yes, you will have to amend your 2023 tax return to report the earnings on your 2023 return.

On your 2023 tax return:

1. Click on the "Search" on the top right and type “1099-R” 
2. Click on “Jump to 1099-R”
3. Enter the 2024 Form 1099R 
4. On the "Which year on Form 1099-R" screen say that this is a 2024 Form 1099-R.
5. Click "Continue" after all 1099-R are entered and answer all the questions.
6. 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.

[welovedoingtaxes]

Hi thanks for the response. Do you know whether I need to amend both the 2023 federal and state tax returns?

[ThomasM125]

The state return would need to be amended as well to see if there is a tax liability as the income would likely be taxable on the state return if taxable on the federal return.

[welovedoingtaxes]

I see, thank you.

And for my understanding, does the amendment update the 2023 Roth IRA contributions set from $0 contributions to $6500? Or does the amendment only include the 2024 1099R details? 

[DanaB27]

If you entered the $6,500 contribution on your 2023 tax return then make sure that you indicate that you removed the excess on the penalty screen:

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. Enter the Roth IRA contribution
5. Continue until the penalty screen and enter the excess contribution amount withdrawn.

If you didn't enter the Roth IRA contribution in the IRA contribution interview then you do not need to add it since you withdrew the contribution plus earning by the due date. In this case you only add the 2024 Form 1099-R.

[sdpfeiffer]

I have a very similar situation with with a SEP IRA 2024 excess contribution.  My 1099R has the P distribution code only.  And of course Turbotax 2024 says that I must amend my 2023 tax return.  I took the excess contribution and interest/earnings as a distribution prior to April 15, 2024, per calculations by the brokerage firm, so at least I was compliant . 

I think from the above reply I understand how to amend the 2023 tax return (create a 1099R for the amended 2023 form and answer all the questions).  What I don't understand is whether or not I should delete the 1099R that downloaded into Turbotax 2024.  Should I?  Or will it be ignored (not counted as 2024 income due to the P code)?

[fanfare]

If 2024 document shows tax withheld you will get that back. It probably doesn't, so there is no effect on yout 2024 tax return

@sdpfeiffer 

[sdpfeiffer]

No tax was withheld.  But my question is about the latent 1099-R with it's P code in 2024 Turbotax... will or won't Turbotax include the $1500 distribution as 2024 income?  Do I need to delete the form, or will that upset the IRS?

[fanfare]

It make no difference whether you delete it or leave it.

TurboTax and IRS know how to handle code "P".