Partial excess Roth contribution was withdrawn and reported in 1099-R

[kent_up7]

I opened a Roth IRA account in 2020 and contributed $6000. I withdrew $1100 from this Roth account later in 2020 and received a 1099-R for this withdrawal in early 2021. During the tax return, TurboTax  reported that the $6000 is excess contribution. So I withdrew all the remaining $5870 in the Roth account for correction.

I created a substitute 1099-R for the $5870 withdrawal ($4900 is my contribution, $970 is earning) following

https://ttlc.intuit.com/community/retirement/discussion/how-do-you-correctly-file-an-excess-contribu...

However, as I have the1099-R reporting the $1100 withdrawal, TurboTax reported $2070 ($1100 + $970) as taxable income. I think the $1100 shouldn't be taxable and it can be treated as correction of the excess Roth contribution. Is that right? How to change in TurboTax so only $970 is reported as taxable income? 

Thanks.

[ThomasM125]

The $1,100 distribution should not be taxable. The form 1099-R must have a bad code in box 7 if it is showing as taxable. What is the code there?

[kent_up7]

Hi ThomasM125,

Code is "J" in box 7. 

Thanks.

[ThomasM125]

Code "J" would designate the distribution as being a distribution from a ROTH IRA, so it shouldn't result in taxable income when you enter it in TurboTax. I entered a form 1099-R in my program and put code "J" in box 7 and did not indicate that I rolled the distribution over to another retirement account and it did not show as taxable on form 1040, line 4(b). 

You should review your form 1040 to see if the distribution is showing as taxable as per the following steps:

1. Tools (left side of the menu bar)
2. Tax Tools 
3. View Tax Summary
4. Preview my 1040 (left menu bar)

[kent_up7]

My Form 1040, line 4b is $2070.

I checked "Form 1099-R Summary" and found this $1100 is treated as "Taxable earnings on nonqualified distributions"
and $970 as "Earnings on return of contributions". So the "Taxable amount included on Form 1040, line 4b" is $2070.

I went over the Roth IRA forms (one in "Retirement Plans and Social Security" in "Wages & Income", another in "Retirement and
Investment" in "Deductions & Credit") again. But $1100 is still in taxable income as I'm not qualified for reducing "early
withdrawal penalty".