Do I wait for the 2025 tax year to report a 1099-R since Turbo Tax is only prompting me for one received in 2024, even though it applies to the 2024 tax year?

[renee66]

I haven't filed my 2024 taxes here yet. Just learned income too high for the 2024 contribution I made to Roth IRA. I will withdraw the principle I contributed to my ROTH IRA in 2024 before I file taxes. Turbo Tax asks if I received a 1099-R IN 2024, but I did not, I will get one in 2025 after I make the withdrawal of overpayment.  Do I wait for the 2025 tax year to report a 1099-R  since Turbo Tax is only prompting me for one received in 2024, even though it applies to the 2024 tax year?  Also, I have left the principle as cash, not invested it, but pre-existing money in the Roth IRA was making some interest income, how is it determined which principle earned the income? is there some formula where you have to claim it made money because the whole account made some, or will it just assume if there's a lot more sitting cash in the Roth IRA than the disbursement amount that I made no income on it?

[DanaB27 · Accepted solution]

Please make sure you request the withdrawal of excess contributions plus earnings to remove the 2024 excess Roth IRA contribution.

Generally you financial institution will calculate the earnings for you. But if needed you can use this Worksheet 1-4. Determining the Amount of Net Income Due to an IRA Contribution and Total Amount To Be Withdrawn From the IRA.

If you made an excess contribution in 2024 and withdrew the 2024 excess Roth IRA contribution plus earnings in 2025 before the due date, then you will get a 2025 Form 1099-R in 2026 with codes P and J. 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 add anything to your income in the 2025 tax return but the withholdings will be applied to 2025.

To enter a 2025 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.

Also make sure you indicate in the IRA contribution interview 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. Enter the Roth IRA contribution
5. Continue until the penalty screen and enter the excess contribution amount withdrawn.