In 2024 I accidentally contributed twice, a few minutes apart, to my Roth IRA due to a computer glitch on the retirement company's end where it said it my deposit from my bank account didn't go through, so I tried again and both went through. Seven days later I received the refund the excess. I now have a 1099-R for the refund.
I live in MS which taxes distributions from Roth IRA's. The federal taxable income included on it in box 2a is just the interest which is correct.
BUT in the state taxable income line distribution line 16 it lists the entire amount as taxable income (return of overpayment and interest). I think the retirement company screwed up on my 1099-R. Because it wasn't a regular distribution on line 7 (Distribution codes) it says 8 "Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2024.". I have already paid state taxes on that money, it wasn't a regular distribution, it was a refund of an excess contribution. I should only have to pay taxes on the interest it earned ($3 and loose change), not the entire amount.
I think they screwed up in a second way on line 7 as they also put J--Early distribution from a Roth IRA, no known exception (in most cases, under age 59½).". I've had that Roth for over 20 years so it isn't an early distribution and I am well over 59.5 years old. Am I right in thinking that is why they listed the entire amount on line 16 "state Distribution"?
I called the retirement company to get a new 1099-R. The person who answered the phone stated that all he could do was pass my concern on to a group within the company that works on that; that they use "J" for all sorts of things beyond what it states it is for, even though in my case none of the things listed with J is true.
I's appreciate advice someone can give me so I handle this correctly (other than to move out of the arm pit of the nation - which, trust me, I'd like to do but can't - so I don't have to pay state taxes on Roth IRA distributions in the future. LOL). I am presuming that they need to fix line 16 to just have the interest and not the refund. Is that correct?
Thanks in advance.
