1099R Affecting Both 2024 and 2023 Income?

[MuMoo]

Hi,

In 2023 I made the max Roth IRA contribution, but when I was preparing my taxes, TT helpfully let me know that, due to lots of investment income that year (yay), I had surpassed the threshold for full contribution, and that I would need to get ~$5K of my 2023 contribution returned to me as an excess contribution.  No prob - my brokerage firm completed my return of excess request before 04/15/24.

Fast forward to this year, as I'm completing my FY24 taxes.  I received a 1099R with codes JP for the $5K in Box 1 Gross Distribution (and ~$600 in Box 2a for Taxable Amount and $65 in Box 4 for Federal Income Tax Withheld).  I enter in these amounts for my 2024 taxes, but as TT is walking me through, it tells me I need to amend my 2023 taxes.

When I go back into TT to amend 2023 taxes, I "revisit" my 2023 1099R entries and add this form (labeled as a 2024 form (which makes sense, since that's when I get the 2023 excess contribution returned to me) but which covers a 2023 excess contribution).  What is throwing me for a loop is that my 2023 amended tax form now says I owe ~$500 in taxes.

Since I entered in the data on this 1099R form in both my 2024 return and the amended 2023 return (and as both sets of numbers show up in the "income" section of both of those returns), I just want to understand/verify that I am not getting dinged in both 2023 and 2024 for that Box 1 Gross Distribution of $5K?

Any guidance is much appreciated...

[DanaB27 · Accepted solution]

TurboTax will ignore the income on the 2024 return but apply withheld taxes to the 2024 return because of the code P. You do not get doubled taxed.

If you were in the phaseout range for Roth IRA contributions then the earnings from the returned excess contribution can trigger a new excess. You will need to pay the 6% penalty on your 2023 return.

If you can apply the excess contribution as a 2024 contribution then you can avoid paying the 6% penalty on your 2024 return.

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. On the "Do you have any Excess Roth Contributions" answer "Yes"
5. On the "Enter Excess Contributions" screen enter the total excess contribution from 2023
6. On the "How Much Excess to 2023?" screen apply the 2023 excess to 2024.

If you cannot apply the 2023 excess to 2024 then you have to pay the 6% penalty on your 2024 return. You need to take a regular distribution without earnings to remove the 2023 excess contribution. You will get a 2025 Form 1099-R with code J (if you are under 59 1/2) in 2026. When you enter it next year on your 2025 return then it will resolve the excess contribution.