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michaelpauls1
Level 1

I contributed to IRA in 2020 but don't have any earned income that year. I am planning on withdrawing all of it by April 1st. Where in turbo would I need to enter it?

How do I pay 6% penalty tax? would I need to enter this info under early retirement withdrawal?
1 Best answer

Accepted Solutions
DanaB27
Expert Alumni

I contributed to IRA in 2020 but don't have any earned income that year. I am planning on withdrawing all of it by April 1st. Where in turbo would I need to enter it?

If you withdraw the excess contribution plus earnings by April 15 then you will not have to pay the 6% penalty. Please tell your bank that it is a withdraw of excess contribution plus earnings.

 

Please follow these steps to enter the contribution and the withdraw:

 

  1. Login to your TurboTax Account 
  2. Click on the Search box on the top and type “IRA contributions”
  3. Click on “Jump to IRA contributions"
  4. Select which IRA you have
  5. Continue answering the questions until "You Currently Have a Penalty" screen and enter the contribution amount you plan to withdraw by the due date

 

You will get a 1099-R 2021 in 2022 with codes P and J (for Roth IRA) or 1 (for traditional IRA). 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 (if you had a Roth IRA) or 1 (if you had a traditional IRA) 
  8. On the "Which year on Form 1099-R" screen say that this is a 2021 1099-R.

 

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1 Reply
DanaB27
Expert Alumni

I contributed to IRA in 2020 but don't have any earned income that year. I am planning on withdrawing all of it by April 1st. Where in turbo would I need to enter it?

If you withdraw the excess contribution plus earnings by April 15 then you will not have to pay the 6% penalty. Please tell your bank that it is a withdraw of excess contribution plus earnings.

 

Please follow these steps to enter the contribution and the withdraw:

 

  1. Login to your TurboTax Account 
  2. Click on the Search box on the top and type “IRA contributions”
  3. Click on “Jump to IRA contributions"
  4. Select which IRA you have
  5. Continue answering the questions until "You Currently Have a Penalty" screen and enter the contribution amount you plan to withdraw by the due date

 

You will get a 1099-R 2021 in 2022 with codes P and J (for Roth IRA) or 1 (for traditional IRA). 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 (if you had a Roth IRA) or 1 (if you had a traditional IRA) 
  8. On the "Which year on Form 1099-R" screen say that this is a 2021 1099-R.

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

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