I received a 1099R with a distribution code:P Excess Contribution even when I reversed my IRA contribution last year 05/04/2015. What do I do during this year filing?

[ski123786]

On 03/16/2015 I have contributed $5000 to my existing IRA account later while filing my actual taxes in my 1040 form I didn’t mention that I was contributing to IRA and I immediately requested my banker to revert my $5000 contributions. I did see that my contribution has been reverted from IRA account on 05/04/2015.  But in the end of last year I received 1099-R with distribution code: P (Excess Contribution/Earnings), what should I do now?

A. If I report this 1099-R document during my current year tax filings, it will indicate that I have done excess contribution last year which I did not. 

B. If I neglect/disregard this specific 1099-R during my current year tax filings it will raise triggers to IRS that I avoided reporting all my earnings. Please clarify on how should I handle this situation.

[fanfare]

P is for Prior  as in prior year.

It does not go on your 2015 tax return.

[fanfare]

does your 1099 code P show a small taxable amount in Box 2a? if so, and it has not already been reported, amend your 2014 tax return to include this income.

[kparekh]

Hello,

I am asking a related question on receiving 1099-R since it seems the users here are knowledgeable about this.

I made $5500 contribution to my IRA account in year 2018. I am US citizen living outside the country and I have no W-2 income in USA. While preparing my 2018 Taxes I got a message from Turbotax that I am not allowed to contribute to IRA account and I should revert the transaction.

I called my IRA company immediately and reverted the transaction and got the money out of my IRA account.

I have received a 2019 Form 1099-R with Box1= 6044.04 and Box 2a = 544.04 and Box 7(Distribution Code) = P1, IRA/SEP/SIMPLE is marked 'X'

While I was preparing the 2019 Taxes with TurboTax I got a message that I will need to amend my 2018 tax returns. Since I have filed my taxes for 2019 I cannot get back to reviewing it or re-checking the message or any instructions that Turbotax may have given.

Please guide me what do I have to do. I will truly appreciate your guidance here.

Thanks,

KParekh.

[dmertz]

TurboTax is reminding you that the taxable amount was reportable on your 2018 tax return.  If the $544.04 of taxable earnings was not already included on your 2018 tax return (2018 Form 1040 line 4b and the early-distribution penalty on Schedule 4 line 59), you must amend your 2018 tax return and add this Form 1099-R, making sure to indicate in the follow-up questions that it is a 2019 Form 1099-R.  If these amounts were already included, there is no need to amend.

[kparekh]

dmertz,

Thank you very much for your quick reply.

Just some additional information:

Hello,

I auto-downloaded all Fidelity Tax statements into Turborax while preparing the 2019 Taxes and got a message that I will need to amend my 2018 tax returns because of 1099-R form. Since I have e-filed my 2019 taxes already I cannot go back to find the message or instructions Turbotax may have given.

I found a 1099-R related letter from Fidelity after reversal of funds dt. July 2019 that says the transaction will be reported to IRS and I will be required to file IRS Form 5329 with my tax return. I rechecked my filed 2019 Tax Returns and found that no Form 5329 filed by Turbotax.

Please reconfirm - File 2018 Amend Tax Return with 2019 Form 1099-R/explanation OR File 2019 Amend Tax Return with Form 5329/2019 Form1099-R? I will truly appreciate your guidance here.

Thanks,

KParekh.

[dmertz]

Form 5329 is not needed if the early-distribution penalty can be reported directly on 2018 Schedule 4 line 59.  Check there.  If you do not see the $54 penalty included there you need to amend and likely means that the $544,04 has not been previously included on Form 1040 line 4b either.

[kparekh]

Hello mertz,

Thanks I will be doing this:

File 2018 Amendment with details in Line 4a and Line 4b

(No Schedule 4 or Form 5329 as excess contributions were removed within 6 months  after 2018 Tax Return Due date (viz. April 17, 2018)).

Attach 2019 Form 1099-R received from IRA account

In my case, this was not a pre-withdrawal from IRA account, post-tax funds contributed to IRA was done as a mistake and transaction was reversed as soon as possible once error was realized.

Your guidance is very helpful.

Thanks.

[dmertz]

The $544.04 of earnings are subject to a 10% early-distribution penalty as part of your amendment.