Do I need to amend my 2019 return due to an excess contribution withdrawal 2020 1099-R?

[mtoboggan]

I over-contributed to a 2019 Roth IRA. I realized at the beginning of 2020, and withdrew the contributions before filing my 2019 taxes. Any earnings on the over-contributions were also removed by Vanguard. I received a check with the withdrawn amount (as a distribution) in 2020. However, because Vanguard indicated I would not receive the tax form for the withdrawal until the next year (2021), I did not report any of it on my 2019 taxes.

This year (2021), I received a 2020 1099-R for the withdrawal/distribution, and it has code BP in box 7. Taxable amount is shown as 0.00. The P seems to indicate that it is applicable as prior year income. I added it to my 2020 return but it doesn't seem to affect my tax burden. 

Due to the code P, do I need to amend my 2019 return to take this 1099-R into account?

[macuser_22]

Yes.   The code "P"means taxable in 2019 so it must go on an amended 2019 tax return.

[npierson7]

Yes, you need to amend your 2019 return to include there excess contribution amount. 

You can do it in TurboTax. 

To start your amended return, go back into TurboTax, open the return that you already sent in, and on the first page you see, click on the link to amend your return.

Please keep in mind: have a copy of your original return at your side before you start. And be sure you use the correct year’s version of TurboTax.

[mtoboggan]

Thanks for the replies. I switched jobs/states halfway through the year. The overcontribution I withdrew was only at one of the jobs (so only in one state). Do I still need to amend federal + 2 states, or just federal + the one state? 

@macuser_22  @npierson7 

[macuser_22]

Just the state that the excess was in box 12 on your W-2 and reduced the box 1 taxable wages.   Amending adds it back to your taxable wages which will probably increase Federal and state tax tax owed.

[mtoboggan]

@macuser_22  Thank you so much. Do I need to include the 1099-R on my 2020 taxes as well? Which means it would be included on both my 2019 amended and my 2020 taxes? 

[macuser_22]

No.   It is not on your 2020 tax return if a code P - TurboTax ignored it.

[mtoboggan]

Thanks! This is resolved 🙂 

[mtoboggan]

@macuser_22 @npierson7  Hi! Sorry, I'm back with a follow-up. I've done my amended return for 2019, added the 1099-R income (I put the code as BP, and when it asked "What year does it say on the return?" I put 2020). But the 1040-X says that the adjusted gross income is the same, that I had no taxable retirement income, and there are no changes to my tax implications. Does this make any sense to you? The taxable amount in box 2 does show as 0.00 but I don't know whether I should still be paying a penalty tax for withdrawing early. 

[macuser_22]

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@mtoboggan wrote:

@macuser_22 @npierson7  Hi! Sorry, I'm back with a follow-up. I've done my amended return for 2019, added the 1099-R income (I put the code as BP, and when it asked "What year does it say on the return?" I put 2020). But the 1040-X says that the adjusted gross income is the same, that I had no taxable retirement income, and there are no changes to my tax implications. Does this make any sense to you? The taxable amount in box 2 does show as 0.00 but I don't know whether I should still be paying a penalty tax for withdrawing early. 

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That is correct.   A return of Roth contribution is not taxable, only earnings that were returned are.

A zero in box 2a either indicates not earnings or a loss, so there is  nothing to tax.      There is no reason to even mail the  do-nothing amended return unless the IRS contacts you just to have it for the record.

[mtoboggan]

@macuser_22  just to make sure I 100% understand:

1) I only need to do my 2020 returns this year, and no longer need to file an amended return for 2019 for state or federal?

2) Should i still prepare the amended return and just not send it in? or because the 2019 and 2019-amended are essentially identical, would that be pointless? 

[macuser_22]

Since there is zero taxable income in box 2a, there will be absolutely not change to 2019.    You can amend if your want just so the IRS gets your reason for amending (to add a 1099-R) that does nothing.       I would take the trouble of amending.     It the IRS ever questions it (which id doubtful) then a phone call should clear it up.

[mtoboggan]

1. Got it, so I should still file an amended return for 2019 even though the 1040x is identical -- should I just note in the reason for amending "I corrected a Roth Overcontribution resulting in $0 of taxable retirement income"?  

2. For both 2019 and 2020, nothing from the 1099-R is showing up on my 1040 in 4a or 4b -- it looks like there is no reportable retirement income. Is that normal? Box 7 has code BP and the retirement disbursement was for 2019, but received in 2020 (it says 2020 on the 1099-R). 

[macuser_22]

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@mtoboggan wrote:

1. Got it, so I should still file an amended return for 2019 even though the 1040x is identical -- should I just note in the reason for amending "I corrected a Roth Overcontribution resulting in $0 of taxable retirement income"?  

2. For both 2019 and 2020, nothing from the 1099-R is showing up on my 1040 in 4a or 4b -- it looks like there is no reportable retirement income. Is that normal? Box 7 has code BP and the retirement disbursement was for 2019, but received in 2020 (it says 2020 on the 1099-R). 

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As I said, I would not amend since a code BP with a zero box 2a will do nothing.   The only thing amending would do is have your statement of the reason for amending.