Traditional IRA and Roth Conversions for prior and current tax years

[00WM00]

On March 11, 2020 I made a non-deductible cash contribution for tax year 2019 to my Roth IRA. When I later prepared my 2019 federal taxes for filing, I discovered my AGI was too high to contribute directly to my 2019 Roth IRA without penalty.

I later received a 2019 Form 5498 regarding this Roth contribution.

On May 1, 2020, I took a 2019 tax year Roth IRA distribution, as a “Return of Excess,” in the exact amount as my above mentioned 2019 tax year Roth cash contribution, which had no earnings as it had been held in cash only.

The filing deadline for tax year 2019 was July 15, 2020. I did not receive a 2019 1099-R regarding this Roth distribution. Should I have? Instead, I received a 2020 1099-R for it. It is coded as both:

J--Early distribution from a Roth IRA, no known exception (in most cases, under age 59½).  (I am over 65.)

and

P--Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2019.

Should different codes have been used? Perhaps “R” or “T”?

Also, on May 1, 2020, I made a non-deductible cash contribution of the same amount to a 2019 tax year Traditional IRA.

I later received a 2019 Form 5498 regarding this Traditional contribution.

On May 8, 2020, the above 2019 tax year non-deductible Traditional IRA was converted as a Rollover to a 2020 Roth IRA in the exact same amount. Again, it had no earnings as it had been held in cash only. I received a 2020 1099-R for this distribution as well as the one mentioned above. It is coded as:

7—Normal Distribution.

The Turbo Tax application is telling me I need to Amend my 2019 Tax filing so I can avoid 2019 taxes paid on the above amount which traversed the described process of contributions, distributions, conversions, etc.

I believe this is because the 2020 1099Rs mentioned above are indicating I will be paying redundant taxes on it this year.

Are there other options, such as having the above codes changed by the account custodian?

If I indeed do have no option other than to amend my 2019 tax filing, must I do so in advance of filing my 2020 tax forms?

[macuser_22]

The 1099-R code PJ is correct and must be reported on an amended 2019 tax return.  Only the amount in box 2a will be taxable but it must be reported taxable or not.

Also to get credit for the 2019 non-deductible Traditional IRA contribution you must report that in the IRA contribution interview for Traditional IRA's and say it is to be non-deductible so there will be a 2019 8606 form showing the nondeductible contribution on lines 1,3 and 14.

You can only claim it to offset the tax on the 2020 conversion if you have the 2018 8606 form otherwise it is forfeited.

[00WM00]

Thank you for the reply. In its final sentence it says, "... if you have the 2018 8606 form otherwise it is forfeited." Please confirm that "2018" is a typo and should have been "2019."

Also, I filed my 2019 taxes electronically using that feature of TurboTax, When looking just now in the archived 2019 forms produced by TurboTax, I find a 2019 Form 8606 in the archived version printed with "all worksheets." However, that form is not present in the version printed with "documents as needed for filing."

I assume it was sent with the electronically delivered forms. If not is that an issue? How would I know if it was or not?

Do I need to also amend my 2019 Virginia state tax filing? If so, I printed and mailed those documents rather than filing them electronically. Therefore, there is not a Form 8606 in the "documents as needed for filing" which I mailed to the Virginia Tax Collector's Office.

Do you have any guidance in regard to this? Is it appropriate for TurboTax to have omitted Form 8606 from the "documents as needed for filing?"

[00WM00]

 Must I amend my 2019 tax filing, in advance of filing my 2020 tax forms?
Will having done so, impact the 2020 tax results I receive from TurboTax?

[macuser_22]

Yes typo should have been 2019.

If the 8606 has the non-deductible contribution on line 1 then you should be fine, however it should be in the forms required for filing.   I cannot explain why one and not the other.

Sorry, I know nothing about VA tax.