Remove Excess Roth IRA Contribution and Next Steps

[sg758532]

In 2020 I made a $6000 contribution to my Roth IRA (I'm younger than 59.5 years old). When doing my 2020 taxes in early 2021, I found out about this excess contribution and had the contribution and earnings ($7000) removed before filing my taxes (rollover/recharacterization was not an option). When filing my 2020 taxes, I followed the TurboTax instructions ("Withdraw the Excess Contribution from your Roth IRA/Made the contribution to the Roth IRA in 2020 and withdrew it in 2021") to create a substitute 1099-R, which I filled out to the best of my ability at the time, since the $1000 earnings are taxable in the year the contribution was made, not the year it was withdrawn. 

Now that it is 2022 and I received the 1099-R corresponding to my excess+earnings withdrawal from early 2021, I realized that my substitute 1099 form has many of the correct numbers (boxes 1, 2a, and codes PJ in 7), but not all of the numbers are correct: I left boxes 4, 14, and 15 blank because I was unsure about state and federal tax amounts. The 2021 1099-R I just received has amounts in boxes 4, 14, and 15 that properly reflect what I should have entered in my substitute 1099. 

My questions now are the following:

1. Do I need to file an amended 2020 return and fix the numbers in the boxes I had left blank in my substitute 1099 form? My 2020 tax return showed that I owed $100 in taxes from the earnings (10% of the earnings) and I similarly paid CA state tax on the earnings as well.
2. Do I still include this 2021 1099-R from in my 2021 taxes? Or do I not use this 1099-R because of the substitute 1099-R I created and included in my 2020 taxes? 

Thank you for your time. 

[DanaB27 · Accepted solution]

1. No you do not need to amend your 2020 tax return because the tax withholdings from boxes 4 and 14 belong on the 2021 tax return only. 

2. Yes, you must enter the 2021 1099-R into the 2021 tax return since the withholdings are reported in the year that the taxes were withheld. The 2021 code P will not do anything in 2021 tax return but the withholding will be applied to 2021.