Will I be taxed twice? Amendment for Excess Roth IRA with proforma 1099R and receiving 1099R in 2022

[YSTRBY]

Hello! I realized I had over-contributed to my Roth IRA in 2020 only after submitting my Tax Return. I've already withdrawn the overcontribution and earnings. I've been encouraged to amend my tax return. I believe this happens with Form 1040X via TurboTax, available March 25th, and within that form I submit a pro-forma 1099R. However my financial advisor has informed me that I will also receive a 1099R in 2022. If I'm submitting a proforma 1099R now, will the auto-generated 1099R in 2022 mean I'm taxed a second time?

[DanaB27]

No, you will enter the 1099-R with codes P and J only once on your 2020 tax return.

Since you have already filed you might just want to wait until you get the real 1099-R 2021 in 2022 to amend your return.

If you do not want to wait then please follow these steps in your 2020 amended return:

1. Login to your TurboTax Account 
2. Click on the Search box on the top and type “1099-R”
3. Click on “Jump to 1099-R”
4. Answer "Yes" to "Did you get a 1099-R in 2020?"
5. Select "I'll type it in myself"
6. Box 1 enter total distribution (contribution plus earning)
7. Box 2 enter the earnings
8. Box 7 enter P and J 
9. Click "Continue"
10. On the "Which year on Form 1099-R" screen say that this is a 2021 1099-R.

Then you can  ignore the 1099-R 2021 when it comes in 2022 unless there is Box 4 Federal Tax withholding and/or box 14 State withholding. Then you must enter the 2021 1099-R into the 2021 tax return since the withholding is reported in the year that the tax was withheld. The 2021 code P will not do anything in 2021 tax return but the withholding will be applied to 2021.

Please be aware that you can e-file your 2020 amended federal tax return, but most states require amendments to be printed and filed by mail. Please see FAQ How to amend a tax return for instructions.

Please see Where's My Amended Return? to check the status of your amended return.

[YSTRBY]

Thank you! So basically I'm choosing to enter the information manually now OR wait til I get the official 1099-R, but I would not do both?

Is there any benefit/disadvantage to waiting to get my real 1099-R? Specifically..

(1) Since this is correcting for an excess roth IRA contribution, would there be any additional fees for not reporting this now vs. next year?

(2)Would state-submission still be by mail if I wait until next year?

[ReneeM7122]

Yes, you would be subject to an additional fee for not reporting the excess contribution in the tax year that it happened, and you will need to submit the state return by mail next year.

If you withdraw the excess contribution in 2020 and you have not yet filed your tax return, you can report the withdrawal so you are not charged the 6% penalty for 2020.  

To report the withdrawal you create a substitute 1099-R

• You would enter the 1099-R with the total distribution in box 1 (the contribution plus the earnings),
• The earnings in box 2a,
• Enter code "P" in box 7 (Top) 
• Enter code "J" in box 7 (Bottom).
• On the "Which year" screen say that this is a 1099-R.

[YSTRBY]

Thanks @ReneeM7122 , I'm going through the 1099-R in TurboTax and there are a few fields I'm unsure of how to answer. Any chance you can help clarify? see summarized questions below followed by the multiple choice options beneath.

(1)Where is your distribution from? - no idea on this one. 

(2)What year is on your 1099-R? (must choose between 2020 and 2021) 

(3)Do any of these situations apply to you? - not sure?

(1) Where is your distribution from?

Select the source of this distribution and enter any other New York information. Learn more

 Option1: Retirement distributions from:

• US Government (including military)
• New York State and City Education
• Certain public authorities
• NYC Variable Supplemental Funds (VSF)
• Certain annuity funds
• Other Pensions of New York State and Local Governments

Option 2: Retirement distributions from:

• New York State and City Education (optional retirement program)
• IRA rolled over from a former government pension
  

Option 3: Not eligible for exclusion for those over age 59 1/2

Option 4: None of the above (select for deferred compensation 457 plans)

(2)What year is on your 1099-R?

Check your form for the year. It might not be the year your contribution was made.

2021

2020

(3)Do any of these situations apply to you?

 I need to file a substitute 1099-R

 The corrected box is checked on this 1099-R

 None of these apply

[DanaB27]

1)Select "none of the above"

2)Select "2021"

3) Select "none of these apply"

[YSTRBY]

FYI @DanaB27 , @ReneeM7122 , Thanks for all your help. FYI it looks like Turbotax may now offer the ability to e-file amendments for New York State. Seems like the mail-in you both mentioned is on a state-by-state basis. Lucky me!

[MNYL]

Hi DanaB27,

I have a similar situation like the one mentioned below.  The good thing is I just received the distribution information (distribution withdrawn amount and earnings) for my excess Roth contribution, and I can include on my 2020 tax return before filing.  So 2a. taxable amount (earning) and 3 (capital gain) meant the same thing and will just be the difference between the total I received minus the total I requested to withdraw, correct?  So next year (2022) when I receive the actual 2021 1099R, I only need to report the federal and state withholdings (since these were deducted), and put down the code P & J (if both show) on my 2021 tax return?   No need to put down again the distribution and earnings that I file in my 2020 tax return (per my 2021 1099R info), correct?  Or due to I have the federal and state withholdings, I cannot file with my 2020 tax return and must file in my 2021 tax return?

Please kindly advise.  Thank you!!