excess ira contributions

[ack38]

on the turbotax page titled "you currently have a penalty" do i enter the excess contribution in the box and also follow your instructions to enter form 1099R?

im not sire if i need to do both or just enter the value in the box on the penalty page and or enter the 1099R 

Also if i do not receive the 1099R before i file do i just estimate what i think it will show?

thanks

[DanaB27]

You can avoid the 6% penalty if you withdraw the excess contribution and earnings by the due date. If you instruct your bank to withdraw the excess contribution and earnings then you can enter the contribution amount withdrawn on the penalty page to avoid having the 6% penalty.

If the excess contribution was to a Roth IRA you will get a 1099-R 2021 in 2022 with codes P and J. This 1099-R will have to be included on your 2020 tax return and you have two options: 

• You can wait until you receive the 1099-R  2021 in 2022 and amend your 2020 return or
• You can report it now in your 2020 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 2021 1099-R into the 2021 tax return since the withholding is reported in the year that the tax was withheld. The 2021 code P will not do anything in 2021 tax return but the withholding will be applied to 2021.

To create a 1099-R in your 2020 return please follow the steps below:

1. Login to your TurboTax Account 
2. Click on the Search box on the top and type “1099-R”
3. Click on “Jump to 1099-R”
4. Select "I'll type it in myself"
5. Box 1 enter total distribution (contribution plus earning)
6. Box 2 enter the earnings
7. Box 7 enter P and J 
8. On the "Which year on Form 1099-R" screen say that this is a 2021 1099-R.

If the excess contribution was to a traditional IRA you will get a 1099-R 2021 in 2022 with codes P and 1. This 1099-R will have to be included on your 2020 tax return and you have two options: 

• You can wait until you receive the 1099-R  2021 in 2022 and amend your 2020 return or
• You can report it now in your 2020 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 2021 1099-R into the 2021 tax return since the withholding is reported in the year that the tax was withheld. The 2021 code P will not do anything in 2021 tax return but the withholding will be applied to 2021.

To create a 1099-R in your 2020 return please follow the steps below:

1. Login to your TurboTax Account 
2. Click on the Search box on the top and type “1099-R”
3. Click on “Jump to 1099-R”
4. Select "I'll type it in myself"
5. Box 1 enter total distribution (contribution plus earning)
6. Box 2 enter the earnings
7. Box 7 enter P and 1
8. On the "Which year on Form 1099-R" screen say that this is a 2021 1099-R.

[sugersam5]

Hi DanaB27,

  I have seen your post for a similar situation Re: 2019 excesses_ This (your directions) is more related to my 2020 Tax Return...………...I searched so many places and every condition/situation talks as if there is always earnings from the (excess) Roth Cntribs., but what if there is a loss (Exmpl: Excess was $360 in 2020, custodian returned $284.xx to me)….Am assuming about $75.xx was a loss_

That said, what goes in Box 1 ($360, I gather, correct? or $284?) and nothing in Box 2a?_  I thank you kindly.

[DanaB27]

To create a 1099-R in your 2020 return with a loss please follow the steps below:

1. Login to your TurboTax Account 
2. Click on the Search box on the top and type “1099-R”
3. Click on “Jump to 1099-R”
4. Select "I'll type it in myself"
5. Box 1 enter total distribution (contribution minus loss) $284
6. Box 2  will be $0
7. Box 7 enter P and J 
8. On the "Which year on Form 1099-R" screen say that this is a 2021 1099-R.

@sugersam5

Please make sure you enter $360 as amount withdrawn in the IRA contribution section when TurboTax states you have an excess contribution.

[sugersam5]

Hi @DanaB27

    I thank you for that_ I am mostly done with completing the 2021 1099R (I hope!), except the 'explanation' part. Per few posts (yours as well) the verbiage is like this:  "I am reporting a 2021 1099-R on my 2020 Tax Return to avoid having to amend "in" 2020", shouldn't "in" be replaced with "the"?  It is not making complete sense to me, unless I am missing it. I thank you again. Micheal_

[DanaB27]

Please enter for the explanation statement "I am reporting a 2021 1099-R on my 2020 Tax Return to avoid having to amend it in 2022" 

[sugersam5]

Thank you @Dana_ Sounds more logical_ will do. Appreciated. M_