Return of excess traditional IRA contribution - 1099-R 2a taxable amount is not correct

[nn18]

Hi, I am in this excess contribution return situation.

I made normal contribution 6500 to my 2023 traditional IRA in 2023, then realized that I was not eligible to contribute due to no earned income. So I withdrew the 6500 contribution shortly after still in 2023. Now I have 1099-R with the same distributed amount 6500 in both 1 and 2a with "taxable amount not determined" checked. box 7 has codes both 8 and 1. 6500 in 2a is excess contribution returned, not the earning part. Let's say my earning is zero. I was not given the option to input in Turbotax what is the actual earning amount. 6500 in 2a is automatically transfered to 4b as taxable amount that adds into my income.

I have already put the 6500 in "pay for any expense -> corrective distribution before due date", but it only removes the 10% penalty.

My question is where I could adjust the taxable amount to the correct earning?

Thanks in advance.

[DanaB27]

You will need to contact your financial institution, this Form 1099-R is wrong.

"For a distribution of contributions plus earnings from an IRA before the due date of the return under section 408(d)(4), report the gross distribution in box 1, only the earnings in box 2a, and enter Code 8 or P, whichever is applicable, in box 7. Also, enter Code 1 or 4, if applicable." (Instructions for Forms 1099-R).

If they refuse to correct the form then you could file a substitute Form 1099-R and enter only the earnings in box 2a.

Please see How do I file an IRS tax extension? for additional information.

[fanfare]

"I was not given the option to input in Turbotax "

You don't enter the earnings, the custodian has to calculate that for you and supply the amount in box 2a.

If you try to calculate yourself you will probably get the wrong result.

If you did not ask for "excess plus earnings" the custodian will not calculate earnings, and will not give you  a code of "8".

all this assumes the custodian knows what they're doing.

@nn18