Married Filing separately. for 2023 I opened a roth ira with 0 in it and funded the max(6500). gained 146.73 in the market. Realized I was ineligible and withdrew with excess contribution withdrawal form. This unfortunately didn't go thru until mid Jan of 2024. Filling out my taxes now I accounted for the ira contribution and subsequent withdraw of 6500 but it wont let me account for the additional earnings in that area
I know I will get a 1099 r in Jan of 25 for the gains of 146.73(total of $6646.73).
Couple questions because I have seen some similar threads
Can't i just get the 1099 r and pay the tax on the earnings for 2024 next year? I don't want to have to file an amended return and saw a similar thread where some did unless they created another 1099 r which was also confusing. I am using turbo tax deluxe with live advice but wanted to put this out there for multiple responses. Thank you to all who respond.
No, when you withdraw an excess contribution for 2023 plus earnings then the earnings have to be reported on your 2023 return (Pub 590-A).
You will get a 2024 Form 1099-R in 2025 with codes P and J for the withdrawal of excess contributions and earnings. This 1099-R will have to be included on your 2023 tax return and you have two options:
To create a Form 1099-R in your 2023 return please follow the steps below:
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.
Ok, thank you. I had a live expert assist me recently but they did not bring this up at all. What is the best way for me to link this information to a live tax expert to help walk me through this when I go to make this correction and assist me with filling everything in?
The gains required to accompany a returned IRA contribution are required to be included on the tax return for the year that the contribution was made. Because the contribution was made in 2023, the gains must be reported on the 2023 tax return. You can do this by entering into 2023 TurboTax the code JP 2024 Form 1099-R as if you have already received it, then indicating to TurboTax in the follow-up that it's a 2024 Form 1099-R.
Under instruction # 12.) Wouldn't my corrective distribution be 6500 because I contributed 6500 and subsequently withdrew the 6500? Or would it be 6646.73(contribution plus earnings) or as previously described the "earnings" which would only be 146.73?
Need some clarification here
Only the $146.73 is taxable, so that's the amount on which you claim the exception to the penalty. The $6,500 is nontaxable and therefore already not subject to penalty, so no exception is to be claimed for that portion. So in the box referred to in item 12, enter $146.73. If everything else was done right, that will eliminate all of the penalty.
Follow up; I have now received my 1099-R(s). I have received 2 forms. On first form gross distribution box 1 is for $0.16 and box 2 b is checked as "taxable amount not determined". On this form box 7 is marked as J
The second 10-99 R is gross distribution of $6646.73 box 1. Taxable amount $146.73 in box 2a which in the previous threads you can see was what I had to pay because of the gains made in 2023 but I did not actually make the appropriate removal until Jan of 2024 therefore needing to pay that 146.73 on the 2023 taxes which I did correctly. this appears to be correct and accounted for. Box 2b on this form is marked "total distribution" and box 7 is a code "PJ"
Please advise on what I need to do with this for filing my taxes with turbotax for 2024.
You need to enter the Form 1099-R as stated in your 2024 TurboTax. You will be asked in TurboTax which year is on the 1099-R form to which you will answer 2024. The distribution will not be taxable on your 2024 return because of the codes in box 7.
Thank you for responding. I thought that if I chose the option to included it on my 2023 earnings in advance rather than wait for the 2024 1099 PJ and amend my 23 return the previous directions in the thread stated to “ignore the 1099r PJ when it comes”.
you’re saying to still enter both the 1099r(J) that I received AND the 1099r(PJ)
A thread that says that you can ignore the code PJ Form 1099-R when it comes is responding to the case where there was no tax withholding. Having taxes withheld from a return of contribution rarely makes sense unless the return of contribution is performed before the end of the year for which the contribution was made.
dmertz! you actually helped me with this last year when I first started going thru this!
so I should just enter both 1099-R forms that I received and it shouldn’t be a problem and I won’t need to file an amended 2023 return?
If the $146.73 was not previously reported on your 2023 tax return, you must amend your 2023 tax return and enter the code PJ 2024 Form 1099-R. If the $146.73 was already reported on your 2023 tax return, there is nothing to amend.
ok thank you I did do that last year so as to avoid having to amend my 2023 return. thats what all these previous threads from last year are about. What about this 1099-R I received for $0.16 marked (J) in box 7. everything else on the 1099-R for this is left blank. 2b is marked as taxable amount not determined.
$0.16 rounds to zero in whole dollars, so you can ignore that Form 1099-R.
Thank you for response. I checked my 2023 return and did confirm the creation of the 1099-R and paid taxes on the 147 gains made in 2023. Should I make any note in my 2024 return that I have previously already did this so that when the IRS gets the 2024 1099-R(PJ) they don't question anything reflexively or will they automatically refer back to my 2023 return and see that I already accounted for this by creating the 1099-R last year and paid on the gains?
IRS knows that code P on a Form 1099-R means that the taxable amount is reportable on the previous year's tax return.