Can't figure out how to properly enter excess ROTH IRA contributions for 2021 into my Turbo Tax

[Callen1971]

I always put my wife and my ROTH IRA contributions in at the beginning of every year (not anymore after this).  So, in February of 2021, I put in $7,000 for me and $6,000 for the wife, not knowing that much later in the year, we would blow our MAGI out of the range with unforeseen income.  I have NOT finished filing my 2021 taxes with Turbo Tax.  I spoke with my Vanguard retirement specialist and he said if I withdrew the ROTH contributions totally AND withdrew the earnings on what both accounts had made AND paid the 10% early withdrawal penalty AND claimed the earnings on both accounts, then I wouldn't have to pay the penalty.  Just pay taxes on the earnings and accept the 10% I lost for early withdrawal.  I did this on 03/30/22.  I asked him about this 1099R that I am supposed to enter info from and he said I wouldn't get a 1099R until it came time for tax forms for 2022 to file before April of 2023.  So my question is how to properly enter the information into my Turbo Tax information to show I withdrew all of the money (also, I have NOT made any contributions in 2022 to either ROTH), took the 10% penalty, have all of the info to enter to show the taxable income from the gains made by the $7,000 and $6,000.  Can anyone help explain HOW to enter this properly?

[DanaB27]

First, you will enter during the IRA contribution interview on the penalty screen that you withdrew the excess contribution by the due date.

1. Click on "Search" on the top right and type “IRA contributions” 
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. Continue until you get to the penalty screen and enter the contribution amount as removed by the due date.

As mentioned by Vanguard you will get a 2022 Form 1099-R  in 2023 with codes P and J for the withdrawal of excess contribution and earnings. This 1099-R will have to be included on your 2021 tax return and you have two options:  

• You can wait until you receive the 2022 Form 1099-R in 2023 and amend your 2021 return or
• You can report it now in your 2021 return and ignore the 1099-R when it comes unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding. Then you must enter the 2022 Form 1099-R into the 2022 tax return since the withholding is reported in the year that the tax was withheld. The 2022 code P will not do anything to the 2022 tax return but the withholding will be applied to 2022.

To create a Form 1099-R in your 2021 return please follow the steps below:

1. Login to your TurboTax Account 
2. Click on the "Search" on the top right and type “1099-R” 
3. Click on “Jump to 1099-R”
4. Answer "Yes" to "Did you get a 1099-R in 2021?"
5. Select "I'll type it in myself"
6. Box 1 enter total distribution (contribution plus earning)
7. Box 2a enter the earnings
8. Box 7 enter J and P
9. Click "Continue"
10. On the "Which year on Form 1099-R" screen say that this is a 2022 1099-R.
11. Click "Continue" after all 1099-R are entered and answer all the questions.
12. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Another reason" if you are over 59 1/2 (if you are under 59 1/2 click "Continue")

Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2020" you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2021.