Excess Roth funded 3/3/20 (2020) - removed 3/8/21

[DPNJ]

Hello and thanks in advance for your help.

I overfunded my 2020 Roth on 3/3/20 by $300.  This excess was removed on 3/8/21.  I received a 1099R for 2021 with Dist. codes P and J.  Box 1 Gross Dist is $355.22  and box 2a - taxable amount is $55.22, Fed tax of $5.22 withheld.  The code legend states this is for 2020 and turbo tax informs me to amend my 2020 return.

The brokerage letter, dated 3/8/21, confirming removal of the excess states the request was received before tax filing deadline. It further states that I may need to file form 5329 with the return.  Is this filed with the 2021 return?

I tried to amend the 2020 Turbo tax return, using the 2020 software still on my PC,  and when I entered the info it states to amend 2019.  Very Confusing.

I also can't locate my filed return (filed on-line with Deluxe CD version).  It makes me reset my PW and states no returns were filed yet. 

Any and all help is apprecaited.

Thanks

[DanaB27]

When you amend your 2020 tax return then after you entered your Form 1099-R with codes P and J, TurboTax will ask what year is on the Form and you will select 2021. Then TurboTax will apply it correctly to 2020.

1. Open your 2020 amended return 
2. Click on the "Search" on the top right and type “1099-R”
3. Click on “Jump to 1099-R”
4. Enter your 1099-R information
5. Click "Continue"
6. On the "Which year on Form 1099-R" screen say that this is a 2021 1099-R.
7. Click "Continue" after all 1099-R are entered and answer all the questions.
8. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Another reason" if you are over 59 1/2 (if you are under 59 1/2 click "Continue") 

Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2019" you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2020.

Yes, if you are under 59 1/2 the earnings are subject to the 10% early withdrawal penalty, it will be calculated on Form 5329.

In regards to the missing file please contact customer service. Please see What is the TurboTax phone number? 

[Edited 3/22/2022 | 5:08am PST]

@DPNJ 

[DPNJ]

Thank you kindly.  I will try.  

Can you elaborate on logging into Turbo Tax.  Do you mean open the 2020 application and work within?  When I log into the Intuit account and click to view the return on the bottom, it states I have not filed a return yet.

Thank you in advance.

[DanaB27]

Yes, open your 2020 amended return. Then you should be able to add your 2021 Form 1099-R with codes P and J.

Please see How do I amend my 2020 return? for instructions.

[dmertz]

In 2020 TurboTax, when you enter the 2021 Form 1099-R you must, when asked, indicate that the form is a 2021 form.  This will cause TurboTax to treat the box 2a amount as taxable on the 2020 tax return and will not tell you that it should be reported on your 2019 tax return.  Ignore the text in the selection box that suggests that code P applies to 2019, that's assuming that the form is a 2020 form.

It's not clear whether the excess was the result of simply contributing more than the overall annual limit or if you were limited by MAGI.  If you were limited by MAGI and in the phase-out range for Roth IRA contributions, the increase in taxable income with the addition of the $55 will likely cause an additional amount of your Roth IRA contribution to be excess and that excess will have carried forward to 2021.

It's generally unwise to have taxes withheld from a return of contribution.  Because taxes were withheld, you must enter this Form 1099-R into both 2020 TurboTax and 2021 TurboTax because the income is taxable on the 2020 tax return but the tax withholding is credited on your 2021 tax return.

Amending a 2020 tax return requires using the CD/download version of TurboTax.  For those who used the online version of 2020 TurboTax, the amendment software must be downloaded.

[DPNJ]

Thank you.  I will work on and advise if any other questions.

[DPNJ]

Thank you - I will work on and advise if need more info.

[DPNJ]

Thank you - finally getting back to.  I am in the process and have 2 questions:

I still enter the tax withheld in the 2020 amended process?

Anything to know about entering the tax withheld when I proceed to 2021 return?

Also - I'm preparing for NJ - should I leave State $ as zero?

Thanks Greatly!

[DanaB27]

You will just enter the 2021 Form 1099-R as shown on the form on your 2021 tax return and then TurboTax will apply the taxes withheld to 2021. The income won't be counted on your 2021 tax return because of the code P.

On your 2020 amended tax return, you can just enter the 2021 Form 1099-R as shown. TurboTax will not apply the taxes withheld to 2020 because of the code P and you are answering that it is a 2021 form. 

@DPNJ

[DPNJ]

Hello,

Appreciate your speedy reply.  

Always a pleasure.

[DPNJ]

How do you answer the question about the value of Roths as it relates to the "net contribution and if you contributed excess for tracking the basis.  For example.

Q: Withdraw from the Roth before 2021?  

Answer -      no since the withdrawal was 3/2021?

Q: "Enter net regular contributions prior to 2021"

  Do you enter the original gross cumulative or reduce it for the $300 returned in 2021 (which was for the 2020 contribution year)?

A bit confused with the reference to years and net.

Hope you can clarify.

Also - please confirm that I enter the 2021 1099R event though I amended 2020 with the same info.  I guess this is so the tax paid in 2021 is credited to 2021?  Correct?

Thanks and more thanks!

2020 Roth cont. $7k

2021 Roth cont. $7k  withdrew $300plus earnings in 2021 for 2020

Do I enter the 2021 contribution as $7k or $6,700 

[dmertz]

The question about withdrawals is asking about regular distributions.  A $300 return of contribution is treated as if that $300 was never contributed.  That $300 is not part of your Roth contribution basis.

You can enter the 2021 Form 1099-R into 2021 TurboTax.  If it does not affect your 2021 tax return, TurboTax will simply ignore it.

[DPNJ]

Hi - I entered in the 2021 return as suggested and it's calculating $18 on line 25 of form 5329.

Why  ?  I am being charged with the 2020 amended return.

Also - I filed last year with TT installed with the CD.  How do I file the 2020 amended return with tax due?  Mail?

Thanks

[DPNJ]

Hello,

The 2020 amended is calculating the excess at $410. I was originally told I overfunded by $300 so withdrew that plus the earnings of $87. The 1099R is for $387 , $87 taxable.

The 2021 return is picking up $300 as the prior year excess on form 5329 - line  22/24.  Should it be $300 or $410 ?

 The 2020 amended return calculates the taxes on the $87 plus a $25 additional tax on line 25 increase  

The 2021 return is also calculating another tax amount $18 on line 25 of 5329.  

Very unclear - can somebody please clarify what is happening between the 2 returns and if I also owe the $18 in 2021.

Much appreciated!

[DPNJ]

This was due to excess MAGI of a measly $586!!!  What a headache!