How to amend 2023 tax return for excess Roth IRA contribution - form 1040x + 5329

[JonnyEP]

In November 2023 I contributed $6500 to my Roth IRA. In March, I realized my AGI was too high, so it was an excess contribution. I requested (from Schwab) to withdraw the excess contribution ($6500) plus earnings ($578.52). I did *not* report the earnings, or anything about the Roth IRA contribution, on my 2023 tax return. This year I received a 1099-R indicating the distribution: a total distribution of $7078.52, with $578.52 as the taxable amount in box 2a, and with codes PJ in box 7.

1. According to what I have read, I have to go back and amend my 2023 tax return. BUT, I don't know how to do this in TurboTax. When I navigate to my 2023 return and begin to amend it, I am not able to add a 1099-r (or, at least, I cannot figure out how to do that). I think I need to generate a form 1040x plus form 5329, but I can't seem to make turbo tax do that.

2. After I amend my 2023 taxes, do I need to wait to file my 2024 taxes?

3. What steps do I need to address the excess distribution issue in my 2024 tax return?

Thank you.

[DanaB27 · Accepted solution]

1. Please follow the steps below to add the 1099-R on your 2023 amended return.

In TurboTax Desktop:

1. Click "Federal Taxes" on the top and select "Wages & Income"
2. Click "I'll choose what to work on"
3. Scroll down and click "Start" next to "IRA, 401(k), Pension Plan (1099-R)" 
4. Enter Form 1099-R with code P and J 
5. On the "Which year on Form 1099-R" screen say that this is a 2024 Form 1099-R.
6. Click "Continue" after all 1099-R are entered and answer all the questions.
7. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return".

Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2022" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2023.

In TurboTax Online:

1. Click "Wages & Income" (under Federal) on the left
2. Scroll down and click "Show more" next to "Retirement Plans and Social Security"
3. Scroll down and click "Start" next to "IRA, 401(k), Pension Plan (1099-R)" 
4. Enter Form 1099-R with code P and J 
5. On the "Which year on Form 1099-R" screen say that this is a 2024 Form 1099-R.
6. Click "Continue" after all 1099-R are entered and answer all the questions.
7. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return".

2. No, you can go ahead an file your 2024 tax return. 

3. If you had no taxes withheld on the 2024 Form 1099-R with code P and J then there isn't anything you need to do on your 2024 return.

[JonnyEP]

Thank you so much for the help, @DanaB27 !

[[EDIT: in fact, I did not encounter this drop down note, so you can ignore this question, thanks]]

Just to clarify, in your response to me, your note says "Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2022" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2024."

However, I think you mean to say "that it will be taxable in 2023" since we are working on an amended 2023 return, right?

Thanks for the clarification. I'm so grateful for your help.

[JonnyEP]

Also, last questions for @DanaB27 :

1. I believe I am supposed to include, at the top of the amended return, the following text "Filed pursuant to section 301.9100-2"  How do I get TurboTax to allow me to include that? Do I need to file by mail, in that case? Or is it possible to file electronically? [[edit: when I went to finish/print my 2023 amended return, I was prompted to explain the reason for the change, and I entered the text there. It appeared on the 1090X that was generated, in Part II: Explanation of Changes.   Looks like I will file state and federal amended returns by mail]]

2. Should I remove my 2024 Form 1099-R from my 2024 taxes? Since it was included in my 2023 return?

Thanks!

[DanaB27]

1. You entered it correctly. Yes, you will need to mail the amended 2023 return.

2. You do not need to remove the Form 1099-R with code PJ. TurboTax will not add anything to your income because of the code P but will apply any taxes withheld to 2024.

[JonnyEP]

Hmmm. To clarify the question, the 2024 1099-R is reported in the amended 2023 return, because the earnings were taxed in 2023.

Therefore, that 1099-R should not also be reported again in my 2024 return....?

Thanks @DanaB27 

[DanaB27 · Accepted solution]

That is correct. But if you entered it already then you do not need to delete it since the code P on the 2024 Form 1099-R tells TurboTax to ignore the income for the 2024 return. TurboTax will only pull the withheld taxes from 2024 Form 1099-R with code PJ.