Excess 2016 and 2017 Roth IRA contributions. How to fix?

[2004taxfile1]

Hi @dmertz 

Thank you very much for reply!

If I understand you correctly, I have two options for the $677.81 earnings from excess contribution $7000 for 2020.

Opton1:

Right now I could do 2020 Form 5329 to pay 6% penalty first. 
Next Year enter this on 2021 tax return after I receive 2021 1099-R to pay regular income taxes? Or I have to do 2020 1040-X to pay earning income taxes?
Any other penalties would apply if I report it by next year tax deadline?

Option 2:

If I enter it on 2020 Tax return as substitute 1099-R, TurboTax is not able to do e-file so I have to file paper tax return with check payment (can I do e-payment on IRS site)?

I marked code J in 2nd Box7.  Then TurboTax apples $379 excess contribution penalty plus  $68 ( %6) penalty , but I am over 59 ½ in 2020.  Should I remove Code J?  but TurboTax does not allow to remove it.

pls see attachment.

thank you again!

 Explanation from TurboTax online :

[dmertz]

With option 1 you would have to file an amended 2020 tax return after receiving the code PJ 2021 Form 1099-R.  It does not go on your 2021 tax return.  If you enter it into 2021 TurboTax, 2021 TurboTax will just tell you that you needed to report it on your 2020 tax return.

Regarding option 2, just enter the 2021 Form 1099-R as if you have already received it.  Do not enter it as a substitute Form 1099-R.

Regarding the required code J and being over age 59½, I already addressed that:

If you were over age 59½ at the time of this distribution, you'll need to claim an Other reason exception on line 2 of your 2020 Form 5329 to the 10% early-distribution penalty on the $677.81, otherwise you owe a $68 penalty on 2020 Form 5329.

[2004taxfile1]

Hi @dmertz 

1.  I 'd like to chose e-file to reduce next year's work.  What is correct selection on page below?

2. I had excess Roth IRA contribution $7000  made in 1/17/2020 for 2020.

    $7000 was removed with earning $677 in 2/25/2021.

    Why  TurboTax still apples additional $379 penalty if select option #3 (see below attachment)?

    I am 63 in 2021.  Do you think the calculation is wrong according to 

The IRS pub 590-B says:

Withdrawals of contributions by due date. If you withdraw contributions (including any net earnings on the contributions)
by the due date of your return for the year in which you made the contribution, the contributions are treated as if you never made them.
If you have an extension of time to file your return, you can withdraw the contributions and earnings by the extended due date.
The withdrawal of contributions is tax free, but you must include the earnings on the contributions in income for the year in which you made the contributions.

thank you for being patient with me!

[dmertz]

You need to go back through the Roth IRA contribution section and when TurboTax asks if you will have the excess contribution returned, tell TurboTax that you had $7,000 returned.

[2004taxfile1]

@dmertz 

Wonderful! I corrected it. 

If I enter this excess IRA contribution in 1099-R section now, next year do I have to enter it again?

If I do, do I have to re-enter box2a taxable amount? 

[dmertz]

Nothing of this will need to be entered into 2021 TurboTax.

[gman125]

I have a similar situation. I had excess in 2018, 2019, 2020 and 2021. I removed all excess in 2022 and filed 5329's for all 4 years with payments. In addition I filed a 1040x in 19 because the original return had a 5329 additional tax for education trust. I read that if a form changes it's best to send a 1040X. Is this ok?