Excess Roth IRA contribution

[SJH57]

hello,
On 1-11-20, I contributed $7000 (I'm 64) to my Roth IRA for year 2020. When preparing my tax return for 2020 on 5-2021 (I filed for an extension), I realized that I did not qualify for a contribution to my Roth IRA for 2020 since my income was too high. Turbo tax told me to withdraw the contribution and any interest from the account which I did, and to wait until the following year to receive a 1099R, which I did. I did receive a 1099R for 2021, however, I neglected to tell my brokerage firm (Fidelity) that I was withdrawing the contribution and interest due to an excess contribution. The 1099R I received does not have a "P" code in Box 7, just a "T" code. I called Fidelity and asked them to amend the 1099R, but they said they cannot do that.

I'm wondering what my options are at this point. The only thing I can think of is to amend my 2020 return and use the misc income form? Any suggestions? thank you!

[fanfare · Accepted solution]

@SJH57 

If you  took out the contribution and interest,

that means you did the calculation of interest yourself.

The interest has to be reported on Line 4b of your tax return for the year for which the excess contribution was made i.e. 2020.

You will explain what you did on 1040-X Part III - Explanation.

Do not include your old 1040 nor your revised 1040 because the Form 1040-X reflects any changes there and becomes your new tax return.

Your new AGI will be on Form 1040-X Line 1.

Note: if you just enter it as interest income, the effect will be the same.

[SJH57]

thank you for answering my question fanfare! I'm hoping that by amending my return through Turbotax, that it will automatically do what you recommended.