Roth Troubles

[taxpayer211]

In 2022 I made $6,000 excess contributions by accident (salary had increased) and I withdrew the excess contributions plus earnings in 2023 before filing my taxes when I realized the issue. I followed the instructions here (https://ttlc.intuit.com/community/taxes/discussion/reporting-excess-roth-ira-contribution/00/1900728) and chose to report the 1099-R before receiving it, in my 2022 taxes. 

The comment there mentions that I can ignore the 1099-R when I receive it, but not if taxes were withheld. Now that I've received my 1099-R I see that taxes were withheld. TurboTax is now saying I need to amend my 2022 taxes. Do I fill in the 1099-R exactly as I received it or do I make adjustments given that I already reported it in my 2022 taxes. 

Also, in 2023 when I withdrew the excess contributions, I had the contributions transferred to a traditional IRA at a different financial institution which I then converted to Roth (2022 contributions). I also contributed an additional $6,500 (for 2023). I am receiving an additional 1099-R from that financial institution with a gross distribution of ~12,500 for 2023. Is this correct? Am I supposed to include both of these 1099-Rs? It says I owe thousands for my federal taxes when I add both of the 1099-Rs so I feel like I'm doing something wrong.

[fanfare]

If you do the amendment correctly it will show an additional refund of the withheld dollars.

If you can get TurboTax to e-File a 2022 1040-X, you are done.

Otherwise, if filing on paper:

Do not include your old 1040 nor your revised 1040 because the Form 1040-X reflects any changes there and becomes your new tax return.

Include any new/corrected document only if it shows federal tax withheld, and include in order only those Sequence Numbered tax forms and Schedules that changed or were added due to your amendment.

[AnnetteB6]

Yes, you will enter the 2023 Form 1099-R with code P and J on your 2023 return since you had taxes withheld.  Enter it exactly as you received it.  The 2023 code P will not do anything to the 2023 tax return income, but the withholdings will be applied to 2023 (line 25b of Form 1040).

No, you do not need to amend your 2022 tax return if you had already entered the Form 1099-R with code P and J on your 2022 tax return.

You should have a 2022 Form 8606 which will show the basis of $6,000 from the nondeductible traditional IRA contribution for 2022.  Your second Form 1099-R is reporting the distribution from the Traditional IRA which was converted to a Roth IRA.  This will have to be entered on your 2023 return as it was received. 

You will also enter a non-deductible Traditional IRA contribution in your return for the 2023 contribution that was later converted to the Roth IRA.  

Take a look at the following TurboTax help article for detailed instructions to follow, as well as what to do if you did not have the 2022 non-deductible contribution reported on your Form 8606:

How do I enter a backdoor Roth IRA conversion?
 

@taxpayer211 

[taxpayer211]

Thanks for the reply @AnnetteB6 

I believe I followed all the instructions but I still feel like something is wrong.

When I add both 1099-Rs, it is showing that I have $19,000 of "income" from the IRAs, and it now says I owe $3,000  (previously to adding the 1099-Rs, I was due a refund).

This number includes the 2022 Roth IRA contributions that I withdrew (and already paid taxes on), the same contributions (again) that I deposited into a traditional IRA at another institution, that I then transferred to a Roth, and finally, my 2023 traditional->Roth contributions. Is this not counting the contributions twice? I know you said the "P" code would "not do anything" but that didn't seem to be the case when I put everything in. and the 1099-R from the second institution does not have a P or J but a #2 in the distribution code. Is this an issue?

Thanks again

[fanfare]

If you do the amendment correctly it will show an additional refund of the withheld dollars on Line 22.

So, keep trying.

[fanfare]

I don't see that this changes any forms or schedules so the only thing attached to 1040-X is the 1099 R because it has federal withholding,

Do not include your old 1040 nor your revised 1040 because the Form 1040-X reflects any changes there and becomes your new tax return.

[taxpayer211]

@fanfare 

Since I already included the withdrawal and tax withholding on my 2022 return, I shouldn't need to do a 2022 amendment I thought. At least that was the whole point of doing this last year

[fanfare]

Forget about the 1099-Rs that you got, especialy since TurboTax is not working for you.

Get Form 1040-X in editable PDF from the IRS website. Enter 2022 at the top.

Enter the 1099R "amount withheld" in  Line 12 Column B. This is your refund.

All the rest of Column B will be -0-.

Enter the amounts from your original return in Lines 1-13 Col A and Col C

except for Line 12 where the Column C entry will be increased.

Make the remaining entries and do the arithmetic for the rest of the Form.

Fill out Part III explanation.

Mail the form with your 1099-R "Copy for Fed" to the address for 1040-X in the most recent Instructions for Form 1040-X.

@taxpayer211