I deposit $7000 into Roth IRA for 2020 in early 2020. I realized I put too much money into the account. Also I decided to switch $4231(the amount I qualify) into traditional IRA and remove the excess $2769 from Roth IRA. I submit both forms in Feb 2021. There are earnings comes with those to transactions. I understand I wont get the 1099-R form until 2022. I haven't filed the tax return for 2020 yet. I will like to include those recharacterization and removal of excess fund in my 2020 tax return so I don't pay 6% penalty. I was able to enter the recharacterization part of it into Turbo Tax. I also enter the removal amount of $2769. But it didn't ask to enter any earning. I thought I have to pay 10% penalty plus income tax on the earnings. I realized I might have to create the 1099-R myself.
My questions is 1) do I have to create two 1099-Rs, one for each transaction? 2) how to fill out each form correctly?
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Yes, please enter the withdrawn contribution amount of $2,769 ( without the any earnings) in the step asking "contribution withdrawn before due date." This will let TurboTax know that you withdrew it and don't owe the 6% excess contribution penalty.
You will create one 1099-R for the withdrawal of excess contribution:
Yes, you will pay a 10% early withdrawal penalty on the earnings.
You do not need to create a 1099-R for the recharacterization since a 1099-R with code R will do nothing to your return. The only way to report the recharacterization is with the steps below (you mentioned you have already done this):
Thank you very much. I just did that. It goes into my next question. I got to the step asking "contribution withdrawn before due date." Do I enter $2769 as I already create the substitute 1099-R?
Yes, please enter the withdrawn contribution amount of $2,769 ( without the any earnings) in the step asking "contribution withdrawn before due date." This will let TurboTax know that you withdrew it and don't owe the 6% excess contribution penalty.
Im on ssi and trying to get my stuff took care of for the economic impact payment
@Amariott See the post from @DanaB27 above.
You will need a 1099-R to report the Removal of Excess Contribution, with contribution in Box 1, Earnings in Box 2 and Codes J/P in Box 7.
The recharacterization is reported in the IRA Contributions section.
Click this link for more info on how to Create a 1099-R to Report Excess Contribution.
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