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Baldmule
New Member

Excess Roth Contribution

In 2021, prior to tax filing date, I have contributed to an Roth IRA. However, Turbo Tax alerted me that I made an excess contribution due to income restrictions. The excess amount was returned prior to tax filing date.  Why is the 1099-R for 2021 showing the returned excess contribution as Gross Distribution?  When I enter into Turbo Tax it is considered income and increases my total gross income. Is this correct? Is there anything I need to do differently?

 

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1 Reply
DanaB27
Expert Alumni

Excess Roth Contribution

To recap, you made an excess contribution for 2020 but removed the excess plus earnings in 2021 before the due date of the 2020 tax return. And now you got a 2021 Form 1099-R with codes P and J. 

 

This 2021 Form 1099-R with codes P and J belongs on your 2020 tax return. Box 1 should have the distribution plus earnings and box 2a should have the earnings. Only the earnings will be taxable and subject to the 10% early withdrawal penalty if you are under 59 1/2.

 

If you didn't request the withdrawal of excess contribution plus earnings but just took a regular distribution then you are able to enter your net contributions (include the excess contribution in your case) during the interview. The withdrawal of contributions is not taxable.

 

  1. Click on "Search" on the top and type “1099-R” 
  2. Click on “Jump to 1099-R” and enter all your 1099-Rs
  3. Click "Continue" on the "Review your 1099-R info" screen
  4. Answer all the questions and make sure you enter the net contributions prior to 2021 on the "Enter Prior Year Roth IRA Contributions" screen
  5. Answer the remaining question.

 

You can verify your entry by looking at Form 1040 line 4. If you didn't withdraw any earnings then 4b taxable amount will be $0.

 

  1. Click on "Tax Tools" in the left menu
  2. Click "Tools"
  3. Click "View Tax Summary" in the Tool Center window
  4. Click on "Preview my 1040" on the left
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