Roth IRA

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I made an excess Roth contribution in 2020. The funds were returned to me in 2021. I also received earnings on the excess contribution. Where do I put the excess earnings on my 2020 tax return?

RayW7

Alumni - Intuit

Yes, you can report the withdrawal of the excess contribution on your 2020 return.

Open (continue) return if you don't already have it open.
Inside TurboTax, search for 1099-R and select the Jump to link in the search results.
Answer Yes on the Your 1099-R screen,
Click on the box that you are creating a substitute 1099-R
Then select Continue.

The codes you will need for box 7 are J and P.

Since this is a Roth IRA the only amount that is taxable are any earnings on the excess contribution.

You will receive a 1099-R for the withdrawal in 2021 you do not need to report the information since you have reported it on your 2020 tax return.

You must include in your gross income the interest or other income that was earned on the excess contribution. Report it on your return for the year in which the excess contribution was made. Your withdrawal of interest or other income may be subject to an additional 10% tax on early distributions discussed in Pub. 590-B.

JpGp3046EAuthor

Level 2

Thank you Ray for your prompt response.

I have another question, which may be another option for me in regards to my Roth contribution that I made in 2020.

Since I contributed too much to my Roth, based on my 2020 income, can my Roth contribution be recharacterized as a non-deductible contribution to my Traditional IRA? And if so, can the earnings on the Roth contribution also be recharacterized, or will I have to pay tax in 2020 on the earnings?

Thank You for your help.

DaveF1006

Alumni - Intuit

Yes, you can recharacterize the original contribution and earnings as a non-deductible contribution but you would still need to pay tax on the earnings. Just be certain that the non-deductible contribution does not exceed the contribution limits for traditional IRA's. Please read this link for further details.

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