I contributed $6000 to my traditional IRA in 2019 for tax year 2019. Later that year I sold my rental home for a profit and therefore made me ineligible to contribute to a traditional IRA. In October 2019 I told my financial adviser to recharacterize the contribution to a ROTH IRA. They lost the paperwork and I had to resubmit the paperwork in February 2020. In April 2020 I did my 2019 taxes and did it as the amount was recharacterized. In 2021 I get a 2020 Form 1099-R with Box 1 as $7857, Box 2 as $1857, Box 7 as P and IRA/SEP/SIMPLE box is checked. I called my financial advisor questioning why box 7 is P. Turns out he submitted the wrong paperwork. He submitted return excess contribution rather than recharacterizing contribution and now it is to late to correct this. Now I am at a loss on how to correct this.
Was the money actually returned to you or is it currently in a Roth IRA or still in the Traditional IRA? (There is no AGI limits to contribute to a Traditional IRA the limit is being able to *deduct* it.)
If in a Roth and it was recharacterized then the financial institution should issue a corrected 1099-R.
The money was put in my bank account and then immediately taken out and put into my ROTH IRA. They said they can't issue a corrected 1099-R as it is past the deadline.
If the money was put in a bank account first, then the 1099-R is correct - it is not a recharacterization - it is a return of contribution. Only the box 2a amount, if any, is taxable but that must be reported on an amended 2019 tax return.
Although the code "P" is wrong, the amount of $1,857 would be correct as it represents the taxable earnings on the money put into the traditional IRA account, so that would be taxable on your 2019 tax return. So, if you hadn't reported it, you need to amend your 2019 tax return to adjust the entry you made to report the recharacterization to reflect the income not reported.
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Although the code "P" is wrong,
Why do you think code P is not correct. It was a 2019 contribution returned in 2020 so code P is the proper code.