Did excess Roth IRA conversion due to income limits. Have amount for box 1 and the earnings for box 2 of 1099-R. Age 65, not early distribution. Need codes for box 7.

[tbone3912]

Creating 1099-R. I can find a list of possible codes, but no explanation of each. Best I can come up with is 8 J, but only guessing. I am only trying to get the earnings recognized in TT so correct taxes paid. In same year so no penalty.

[DanaB27]

If it was for an excess Roth IRA contribution made in 2024 withdrawn in 2025 then it the code would be P and J. If made in 2024 and withdrawn in 2024 then it would be code would be 8 and J.

Form 1099-R instructions state: "Use Code 8 or P, if applicable, in box 7 with Code J. Do not combine Code Q or T with any other code...." and "For the distribution of excess Roth IRA contributions, report the gross distribution in box 1 and on...." 

Please note there is no limit for conversions. Please do not enter the conversion as a Roth IR contribution. All you need to do is enter the 1099-R for the conversion and indicate in the follow-up questions that it was a conversion.

[tbone3912]

Clarification please, It was for 2024 contribution that I found issue while doing 2024 taxes.  Best info I've found is that to be considered as 2024 withdraw, I have until April 15 2025 to include it in my 2024 taxes return.  I just did the withdraw 3/1/2025.  Please correct me if this is wrong but I should be using 8 and J?  If I use P and J, the IRS and TT will not consider the income in 2024 and look for it in 2025?

[DanaB27 · Accepted solution]

If you had an excess Roth IRA contribution then you need to request the withdrawal of excess contribution plus earnings with your financial institution so they will code the Form 1099-R correctly. The earnings will be taxable in the year the contribution was made.

You should get a 2025 Form 1099-R with codes P and J since you made the contribution in 2024 and withdrew the excess plus earnings in 2025.

  This 1099-R will have to be included on your 2024 tax return and you have two options: 

• You can wait until you receive the 2025 Form 1099-R in 2026 and amend your 2024 return or
• You can report it now in your 2024 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 2025 Form 1099-R into the 2025 tax return since the withholdings are reported in the year that the tax was withheld. The 2025 code P will not do anything to your income to the 2025 tax return income but the withholdings will be applied to 2025.

To create a Form 1099-R in your 2024 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 2024?"
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 "Is the IRA/SEP/SIMPLE box on this 1099-R checked?" screen answer "No, the box is blank"?
11. On the "Which year on Form 1099-R" screen say that this is a 2025 Form 1099-R.
12. Click "Continue" after all 1099-R are entered and answer all the questions.
13. 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 2023" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2024.

You will also need to indicate in the IRA contribution section that you withdrew the excess contribution by the due date to remove the 6% penalty:

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 the penalty screen and enter the excess contribution amount withdrawn.