Apologies if this has been answered before, but there seems to be a lot of potential variation in people's situation. Here is the situation...
- Contributed to Roth IRAs for myself and spouse in March 2017.
- When preparing my 2017 return last year in February 2018, I realized that I ran afoul of the income limits and needed to resolve the situation.
- To resolve this, I removed the excess - the original contributions plus the calculated earnings for March 2017 - February 2018).
- I filed my 2017 return, following the various TT prompts and reported the contributions that had been made but were also withdrawn before the due date of the tax return (e.g., $5,500 contributed & $5,500 withdrawn each for me & spouse).
- Note: The removal of excess was not converted or recharacterized, it was just put into a brokerage (non-taxable) account.
- In February 2019, I received the 2018 1099-Rs for these "distribution" events which document the gross distribution, the taxable portion, and that $0 income tax was withheld (all correct). The distribution codes shown are: PJ.
When preparing my 2018 return, I entered the 1099-R information and TT informed me that I am supposed to amend my 2017 return. However, it also seemed to increased my tax bill for 2018. I am confused if I am supposed to handle this in my 2018 return or if I have to amend my 2017 return...
So, basically, I over contributed to Roths in 2017, then removed the money plus earnings in 2018 and haven't yet paid taxes on those earnings. I am not sure what I need to do to resolve the situation. Anyone know the procedure for this?
You'll need to sign in or create an account to connect with an expert.
Yes if the contributions were for 2017 and you removed them with the earnings to avoid the excess contribution penalty then it is taxable in 2017 and you will have to amend your 2017 return if you didn't include it already when filing the original return.
You will not need to include it on your 2018 return unless it shows tax withholding in box 4. TurboTax should ignore a code JP 2018 Form 1099-R other than to remind you that you should have already reported this on your 2017 tax return.
From IRS Pub 590-A:
"For purposes of determining excess contributions, any contribution that is withdrawn on or before the due date (including extensions) for filing your tax return for the year is treated as an amount not contributed. This treatment only applies if any earnings on the contributions are also withdrawn. The earnings are considered earned and received in the year the excess contribution was made."
Please see below how to amend your 2017 return:
Yes if the contributions were for 2017 and you removed them with the earnings to avoid the excess contribution penalty then it is taxable in 2017 and you will have to amend your 2017 return if you didn't include it already when filing the original return.
You will not need to include it on your 2018 return unless it shows tax withholding in box 4. TurboTax should ignore a code JP 2018 Form 1099-R other than to remind you that you should have already reported this on your 2017 tax return.
From IRS Pub 590-A:
"For purposes of determining excess contributions, any contribution that is withdrawn on or before the due date (including extensions) for filing your tax return for the year is treated as an amount not contributed. This treatment only applies if any earnings on the contributions are also withdrawn. The earnings are considered earned and received in the year the excess contribution was made."
Please see below how to amend your 2017 return:
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
seemabimran123-g
New Member
nikkiebonyjones1
New Member
moontess
New Member
ualdriver
Level 3
cmguillen07
New Member
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.